The Australian and New Zealand dollars shuffled sideways on Tuesday as falling commodity prices, broad US dollar strength and major resistance levels disrupted their recent rally. The Australian dollar inched up to $0.7204, from $0.7187 in early trade. It has gained around two cents in the past two weeks but met heavy resistance near $0.7250, a level tested four times since late October.
Dealers said the Aussie was likely to consolidate between $0.7150 and $0.7250 until fresh news emerged. Reserve Bank of Australia (RBA) Governor Glenn Stevens gives a speech titled "The Long Run" to economists at 0905 GMT and is likely to reaffirm that rates are on hold for now.
Dealers saw a risk he might try and talk down the Aussie given it has proved resilient to a sharp fall in the price of iron ore, Australia's top export earner. Spot iron ore lost more than 5 percent last week and came close to its lowest level since July amid a global glut and faltering Chinese demand. The Aussie came off multi-month highs versus the yen, euro, Swiss franc and kiwi.
The New Zealand dollar held at $0.6532 after failing to sustain a break above $0.6600 last week. It was expected to trade within a range of $0.6490 to $0.6610. Milk futures, which have risen from recent lows, provided some support to the kiwi, analysts said. New Zealand government bonds gained, sending yields 3 basis points lower at the short end of the curve. Australian government bond futures bounced, with the three-year bond contract up 3 ticks at 97.860. The 10-year contract also added 3 ticks to 97.0600, while the 20-year contract gained 2.5 ticks to 96.5350.