SYDNEY: The Australian and New Zealand dollars lost ground on Wednesday, with their near-term fate resting on the outcome of a high-stakes US inflation report, which could further clarify the interest rate outlook in the world’s biggest economy.

The Aussie slipped 0.3% to $0.6405, after closing marginally lower at $0.6422 overnight. Major resistance is at $0.6522, a level that it failed to breach over the past month, while support is at $0.6358, a 10-month low that it managed to rebound from twice last week.

The kiwi was hovering at $0.5899, having also eased 0.3% to as far as $0.5890 overnight.

The US dollar held firm, though moves were subdued as traders awaited a closely watched US inflation reading due later on Wednesday.

While core CPI is seen cooling to 4.3% year-on-year in August from 4.7%, rising energy costs are forecast to keep headline inflation hot at 3.6%, up from 3.2%.

“US CPI tonight looms large over both Aussie and Asian FX, with the potential for a surprise to either spark a return to the 0.65 handle or to produce new 2023 lows,” said Sean Callow, a senior currency strategist at Westpac.

“We would look to sell into any AUD bounce to 0.6520 as we maintain our 0.6200 multi-week target.”

Domestically, data from the Commonwealth Bank of Australia showed that household spending rebounded in August thanks to gains in the education, transport and recreation categories, a sign of consumer resilience.

The Reserve Bank of Australia is widely expected to hold rates steady at 4.1% next month although there is a 40%possibility that the central bank could raise rates one more time in February next year.