The Australian and New Zealand dollars nudged higher on Thursday after Federal Reserve Chair Jerome Powell failed to move the needle on the rate outlook in the first day of his congressional testimony, weighing on the greenback.
The Aussie AUD=D3 was standing at $0.6801, having eked out a gain of 0.1% overnight to bounce off a seven-day low of $0.6743. It has support at the 14-day moving average of $0.6765 and faces major resistance at 69 cents.
The kiwi NZD=D3 was 0.2% higher at $0.6216, after rising 0.6% overnight to as high as $0.6217. It now has support at the 200-day moving average of $0.6155 and faces resistances at $0.6247.
Powell on Wednesday told lawmakers the fight against inflation still "has a long way to go" and further rate increases are "a pretty good guess", in remarks that did not yield any major surprises for markets.
Atlanta Fed President Raphael Bostic suggested the Fed should not raise interest rates further or it would risk "needlessly" sapping the strength of the U.S. economy.
"Fed Chair Powell... didn't shed any new light on the Fed's thinking or the likely future path for monetary policy," said Kevin Cummins, chief U.S. economist at NatWest Markets.
Cummins continued to expect the U.S. tightening cycle had ended, but said it was clear the Fed wanted the market to understand that a hike would be debated at the next meeting and future meetings this year.
Meanwhile, traders have returned to favouring a pause from the Reserve Bank of Australia (RBA) in July, after the minutes of the June meeting showed the board removed the guidance on future rates, even though the line "more tightening may be required" was included in the post-meeting statement.
TD Securities analysts said on Thursday they expected the RBA to hike in July, August and September, taking the current 4.1% cash rate to 4.85% in the wake of the recent strength in the labour market. That compared with their previous forecast of 4.35%.
"Rather than waiting for the data to confirm and provide the green light for the Bank to hike, the RBA has adopted a more pre-emptive, risk management policy response since the May Board meeting," the TD Securities analysts said.
