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SINGAPORE: The Australian and New Zealand dollars were knocked from three-week highs on Tuesday as renewed global inflation fears lifted their US counterpart, but positive economic data in Australia pointed to steady growth and kept selling contained.

The Aussie has rallied for about three weeks and briefly poked above 72 cents on Tuesday before retreating 0.3% to $0.7178.

It is within sight of its 200-day moving average of $0.7260.

The New Zealand dollar fell 0.3% to $0.6536.

Australian first-quarter gross domestic product (GDP) data is due on Wednesday.

Australia, NZ dollars keep rally going as data-fest looms

Analysts said partial indicators on Tuesday suggested growth despite a fall in net exports. Surging imports and a jump in government spending look to offset the decline.

"The Aussie is showing a little bit of resilience given that the GDP partials were better than expected, pointing to a good outcome for tomorrow," said Rodrigo Catril, a senior currency strategist at National Australia Bank in Sydney.

Better-than-expected Chinese factory activity data was also helping contain selling, he added, though investors were cautious because the figures still indicated activity was shrinking in May following a steep contraction in April.

Westpac upgraded its forecast for Australian first-quarter GDP, now seeing it 0.6% higher than in the previous quarter, instead of 0.2%, and 2.9% higher than a year earlier.

The US dollar was broadly stronger on Tuesday after soaring food and energy prices lifted Germany's inflation rate to its highest in a half a century and set investors on edge about aggressive rate hikes to contain it.

Australian inflation hit a 20-year high in the first quarter and the Reserve Bank of Australia lifted its benchmark cash rate to 0.35% in May.

Markets are priced for another hike to 0.6% next week and more to around 2.5% by year's end.

Australian government bond futures tracked a sharp selloff in Treasuries on Tuesday, with the three-year bond contract down 9.5 ticks at 97.060 and the 10-year contract down 10 ticks at 96.630.

New Zealand government bonds were also sold and the 10-year yield rose 7.5 basis points to 3.595%.

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