SYDNEY: The Australia and New Zealand dollars eased slightly on Tuesday, with attention squarely focused on Australian wages data, a rate decision from New Zealand and the US Federal Reserve policy meeting minutes on Wednesday.
The Aussie was hovering at $0.6896, having risen 0.5% overnight to as high as $0.6920 helped by big gains in China’s stock markets on reopening hopes.
It now faces resistance at its 14-day moving average of $0.6932 and has support at the 200-day moving average of $0.6805.
The Antipodean did not react much to the minutes from the Reserve Bank of Australia out on Tuesday, which showed the central bank abandoned the thought of pausing at its policy meeting earlier this month.
The kiwi dollar was off 0.2% at $0.6241, after climbing 0.2% overnight.
It has major support at the 200-day moving average of $0.6186. Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, expects Cyclone Gabrielle could lead to capital inflows from foreign insurers to New Zealand later this year.
Australia, NZ dollars steady after bouncing off lows, RBNZ in focus
However, “these capital inflows are unlikely to have a large impact on NZD/USD in 2023,” said Capurso, adding that the flows are likely to be small at this stage.
Even as the economy faces serious disruptions, the Reserve Bank of New Zealand is still widely expected to raise its benchmark interest rate by 50 basis points to 4.75% on Wednesday.
Traders are waiting for the Aussie wages data, which could help decide how much higher rates would have to go.
Wage growth is seen picking up to a 10-year high of 3.5% in the fourth quarter last year. Australian government bonds slipped a little on Tuesday, with the yield on three-year bonds up 4 basis points to 3.555%, while 10-year yields rose 3 bps to 3.838%.
That left the premium over 10-year Treasuries to a negative 2 basis points.
Elsewhere, investors are turning their attention to the minutes from the latest policy meeting from the Fed for future monetary policy clues.
Recent data has shown the world’s largest economy faring better than expected, raising the chance of interest rates heading higher for longer.
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