The Australian and New Zealand dollars retreated on Tuesday as policymakers in both countries reminded markets of the risk of rate cuts, nudging bond yields lower. The Aussie dollar slipped 0.4 percent to $0.7146 and away from a six-week peak of $0.7193, hit last Friday in the wake of solid Chinese data.
The kiwi dollar eased back to $0.6752, from a top of $0.6782 on Monday. Charts show support coming in around $0.6714/20.
Australian government bond futures rose, with the three-year bond contract up 3 ticks at 98.575. The 10-year contract firmed 2.5 ticks to 98.0650.
Across the Tasman, New Zealand's central bank governor Adrian Orr told Reuters an easing bias remains in place for now and a softer global economy contributed to a recent shift to a dovish policy tone.
Australia's central bank believes a cut in interest rates would be "appropriate" should inflation stay low and unemployment trend higher, though there was no strong case for a move in the near term.
Minutes of its April board meeting, released on Tuesday, showed Reserve Bank of Australia (RBA) policymakers acknowledged the economic effect of ever lower rates could be smaller than in the past, given high household debt and crumbling property prices.
Yet easing would still have some stimulative effect, in part by causing a likely decline in the Aussie.
With other central banks around the world turning dovish in recent months, the RBA has come under pressure to follow, simply to stop its currency from rising and hurting exports.
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