The Australian and New Zealand dollars got a reprieve from selling pressure on Tuesday courtesy of a break in the recent run of bad news from China, and ahead of important inflation data due later in the week.
The Aussie held at $0.6429 AUD=D3 , having traded in a tight 30-tick range overnight. Resistance lies around $0.6450/60 and last week's top of 40.6488, with support at the recent nine-month trough of $0.6365.
The kiwi dollar was flat at $0.5906 NZD=D3 , holding just above its recent low of $0.5887. It faces resistance around $0.5940 and $0.5984.
Both currencies had gained some support from the latest Chinese policy steps, which prompted a rally in beaten-down property stocks and steadied the yuan.
"It may be that a very downbeat China view is already priced into markets," said Sean Callow, a senior currency strategist.
He noted U.S. futures market data showed asset managers held a record net short position in the Aussie last week, equivalent to A$9.3 billion.
"This could mean that even a fresh round of negative headlines around China's property market or growth prospects might not have a major impact near term."
Domestically, Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock is due to speak on climate change later in the session.
This is Bullock's last speech before she becomes RBA Governor in mid-September, so markets will be hoping for hints on where she sits on the dovish to hawkish scale of policy.
The current governor, Philip Lowe, took a dovish turn in the last couple of months, holding rates steady at 4.1% and saying policy was now in a "calibration" phase.
Markets have priced out almost any chance of a rate hike at the RBA's September meeting next week, and around a 60% probability that the tightening cycle was over.
0#RBAWATCH This benign outlook could be affected by data on monthly consumer prices due on Wednesday that are forecast to show a further slowdown in annual inflation to 5.2% in July, from 5.4% in August.
This series is a volatile one, however, and predictions range all the way from 4.7% to 5.9%, suggesting the risk of a market-moving surprise.
Analysts at NAB note that the monthly CPI covers less prices than the main quarterly release and that July is heavily skewed towards goods.
With goods inflation cooling globally, this bias suggests the July CPI could surprise on the downside and NAB are tipping a rise of only 4.9% for the month.
