Aussie steadies; New Zealand bounces

The Australian dollar was stuck in a rut on Tuesday as traders awaited third-quarter inflation data and a speech by the country's central bank governor, while New Zealand's currency bounced off lows.

The Australian dollar was last up 0.1% at $0.6847. It has traded in a $0.6672 and $0.6883 range since mid-Sept.

The New Zealand dollar rose 0.2% to $0.6361.

The small gains in the antipodean currencies were largely led by expectations the United States and China will soon sign a trade deal, perking up risk assets.

Futures imply an around 85% chance the RBNZ will make a quarter-point cut to 0.75%, with a further move to 0.5% seen likely next year.

The boost in risk sentiment from trade optimism led investors to dump safe-haven bonds, sending yields higher.

New Zealand government bonds slipped, sending yields about 8-9 basis points higher across the curve.

Australian government bond futures fell too, with the three-year bond contract off 5.5 ticks at 99.215. The 10-year contract dropped 7 ticks to 98.835.

Reserve Bank of Australia (RBA) Governor Philip Lowe is due to give a speech at 0645 GMT. Third-quarter inflation data due 0030 GMT Wednesday will also be closely watched as a higher-than-expected number could extinguish chances of a fourth interest rate cut this year.

"This speech comes on the cusp of the November board meeting, so given the RBA's very open communication strategy this year, traders will be watching it closely," said Axitrader analyst Stephen Innes.

The RBA has already reduced its cash rate three times this year, to 0.75%, and is considered likely to hold steady at its meeting on Nov. 5.

NAB economist Kieran Davies said Lowe "could expand on recent remarks that increased risk aversion has made it more difficult for monetary policy to stimulate the economy."

There are also murmurs the RBA could launch unconventional monetary policy such as quantitative easing as soon as early next year.

"With bank pass-through of conventional policy to lending rates becoming constrained, our forecast for the next cash rate move in February 2020 implies that this date is the first opportunity for the RBA to announce a QE programme," Citi economist Josh Williamson told clients in a note.

Investors also have one eye on a rate decision by the US Federal Reserve due early Oct. 31 Australia time. Markets are pricing in a quarter point cut.