The Australian and New Zealand dollars held near multi-week highs on Tuesday amid hopes for a rebound in China's reopening economy, while breaks of major chart levels drew bids from momentum funds.
The Aussie stood at $0.6907 AUD=D3 , having hit a five-month peak of $0.6950 overnight. It now faces resistance at an August top of $0.7009 and a chart target at $0.7136, while support lies at the 200-day moving average around $0.6840.
It also climbed to a three-week top on the Japanese yen at 91.82 AUDJPY= after clearing resistance at 91.05.
The kiwi dollar had levelled out at $0.6364 NZD=D3 , after reaching a one-month top of $0.6411. Its bull target is a high from December at $0.6513.
The U.S. dollar has been under pressure as markets scale back expectations for a Federal Reserve rate rise, with futures now heavily favouring a quarter-point move in February rather than 50 basis points. FEDWATCH
The local market also slightly favours a quarter-point hike from the Reserve Bank of Australia (RBA) to 3.35%, with some chance it may pause for the first meeting since May.
0#RBAWATCH The probabilities could be changed by data on monthly consumer prices and retail sales for November due on Wednesday. Inflation is seen popping back up to an annual 7.3% after a surprise pullback in October, while retail spending is forecast to rise a solid 0.7% thanks to major sale events in the month.
A survey from ANZ out Tuesday showed its measure of consumer sentiment bounced 4.9% last week, but was still at historically low levels. Encouragingly, there was also a sharp 0.9% drop in inflation expectations to 5.0%.
"Household inflation expectations eased significantly from the last print of 2022, suggesting cautious optimism about lower inflation through 2023," said ANZ senior economist Adelaide Timbrell.
A run of softer inflation figures globally has helped Australian three-year bond yields AU3YT=RR fall sharply over the past week to 3.31%, well off a December top of 3.56%.
New Zealand two-year swaps NZDSM3NB2Y= have dropped around 31 basis points in the same time to reach 5.11%.
However, the strength of domestic inflation means markets are still priced for another 125 basis points of rate hikes by the Reserve Bank of New Zealand to 5.50%.
0#RBNZWATCH
