SYDNEY: The Australian and New Zealand dollars were on the defensive on Wednesday as market waited to see if the U.S. Federal Reserve would live up to hawkish expectations, or sound just dovish enough to allow a reprieve from speculative selling.

The Aussie idled at $0.7108, after finding support around $0.7090 overnight. It remains well short of last week’s top at $0.7187 and risks a return to the recent 13-month trough of $0.6994.

The kiwi dollar was already back at 13-month lows of $0.6733, after an attempted bounce ran into selling at $0.6770. It has some chart support around $0.6724 and $0.6700.

Markets already assume the Fed will signal an end to asset buying by March or April, and open the door to at least two rate hikes in 2022.

Australia’s central bank is still insisting it will likely keep rates at rock bottom until at least 2023. Adding to the pressure on the currencies has been the explosion of new coronavirus cases globally that clouds the outlook for economic growth and commodity prices.

At home, a surge in new cases in New South Wales has taken a toll on consumer confidence and threatens to stall a much-needed recovery in spending over Christmas.

Over in New Zealand, cases have been limited and consumers are spending up a storm. So much so, that the country sucked in billions of extra imports in the third quarter and blew out the current account deficit to 4.6% of GDP.

All that spending has at least fattened the government’s tax take so that its budget will return to surplus two years sooner than first thought.

It also needs to sell only NZ$20 billion ($13.46 billion) in bonds in 2021/22, a third less than initially planned.