SYDNEY, Sept 27 (Reuters) - The Australian dollar slipped to its weakest level in more than two weeks on Wednesday as latest inflation data supported expectations that the Reserve Bank of Australia would keep rates steady next month.
Against a U.S. dollar buoyed by elevated Treasury yields, the Aussie AUD=D3 eased 0.3% to $0.6376, having already weakened 0.4% on Tuesday.
Strong support was expected if the currency tests its 2023 low of $0.6358, and selling pressure was likely to intensify if that level was broken.
The kiwi dollar NZD=D3 was also down 0.3% at $0.5928, also after easing 0.4% on Tuesday. Resistance is at 60 cents while support is around $0.5920.
Data released on Wednesday showed Australia's inflation accelerated in August but at a pace that was in line with expectations, while a measure of core inflation eased further, a result unlikely to disrupt bets that the RBA will keep rates steady next month.
"While the annual headline rate rose... the monthly series has been running below the regular quarterly CPI inflation data and that a downtrend remains in place," said Andrew Ticehurst, a senior economist at Nomura.
"We think this report will not shift the broad macro or RBA narrative and is unlikely to alter consensus thinking."
Markets expect the RBA will hold rates steady for a fourth straight month in October, but suspect the RBA would have to keep up with its global counterparts to deliver one final hike by May next year.
0#RBAWATCH In the broader currency market, the dollar rose to a 10-month high against its major peers, toppling the euro and sterling to 6-month lows and pushing the yen deeper into intervention territory.
Local bonds gained a little after the inflation data. Three-year Australian bond yields AU3YT=RR slipped 3 basis points to 4.407%, while the benchmark ten-years AU10YT=RR eased 2 bps to 4.389%.
