The Australian and New Zealand dollars recovered some overnight losses on Tuesday, tracking global shares higher, though both appeared to lack firm direction in the lead-up to the release of U.S. inflation data and a Federal Reserve meeting.
The Aussie AUD=D3 rose 0.3% to $0.6765, reversing a 0.7% loss overnight to as low as $0.6729. It has been unable to convincingly breach the resistance level of 68 cents.
The kiwi NZD=D3 was 0.2% higher at $0.6397, after having lost 0.5% during the previous session. It faces resistance at around $0.6420, with support at around 63 cents.
The U.S. consumer inflation report due later tonight, along with policy meeting from the Fed, European Central Bank and Bank of England this week, may determine whether the two currencies can breach near-term resistance levels.
Economists polled by Reuters expect U.S. November core inflation to be steady at 0.3% month-on-month USCPF=ECI but see moderation in the annual pace, with headline prices seen 7.3% higher than a year earlier USCPNY=ECI .
Sean Callow, a currency strategist at Westpac, said this week could determine the direction of the U.S. dollar, not just in the near-term but also into the early weeks of next year.
"It may be pivotal in whether AUD/USD trades closer to 0.70 or 0.66 over the next month or so," said Callow, adding that the lack of firm direction for the Aussie so far made sense in the countdown to the risk events.
Overnight on Wall Street, shares rebounded as investors took an optimistic stance, hoping that the now hefty pace of increases in borrowing costs would finally slow. .N
Offshore Chinese yuan CNH= also strengthened, to 6.9734 yuan per dollar, edging closer to its recent three-month top.
The yield on Australian 10-year government bonds AU10YT=RR held steady at 3.408%. Three-year bonds were also little changed, at 3.108%.
