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SYDNEY: The Australian and New Zealand dollars were trying to find a floor on Wednesday as risk sentiment steadied a little, though whether that lasted depended on what the U.S. Federal Reserve might say on tapering later in the session.

The Aussie was a shade firmer at $0.7241, having found support at $0.7220, though it needs to get above $0.7283 resistance to be out of immediate danger.

The kiwi dollar also edged up to $0.7019, after finding bids at $0.6994. It faces resistance at $0.7040 and $0.7060.

Both drew some relief in news embattled Chinese property developer Evergrande would make a coupon payment on its domestic bonds on Sept. 23, calming fears of an imminent default. Concerns about the viability of the heavily indebted group have weighed on equities and commodities, and pressured the Aussie which is often used as a liquid proxy for Chinese risk.

“The Aussie dollar is still vulnerable to a further worsening of risk sentiment, although we think that the Chinese authorities will manage to avoid a full-blown financial crisis,” said Jonathan Petersen, a market economist at Capital Economics.

“As a result, we forecast a moderate fall in the Aussie to $0.7000 by the end of this year.”

The immediate direction will be set by the Fed with the market assuming it will discuss tapering but put off an actual announcement to October or November.

The danger for the Aussie could be in the “dot plot” forecasts from Fed members which might show the median timing of the first rate hike has shifted to 2022 from 2023. The Reserve Bank of Australia (RBA) remains adamant that its rates are likely to stay at 0.1% until 2024, which is why local 10-year bond yields trade five basis points below Treasuries at 1.28%. Both are set to be way behind the Reserve Bank of New Zealand (RBNZ) which is considered almost certain to raise its rates early next month. Markets are fully priced for a move of 25 basis points to 0.5%, though they scaled back wagers on a half-point hike following a speech from RBNZ Assistant Governor Christian Hawkesby on Tuesday.

The RBNZ has not raised interest rates by 50 basis points since 2000 when they were up at 6.0%.

While 10-year yields eased a touch to 1.89%, they remain 56 basis points above Treasuries.

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