SYDNEY: The Australian and New Zealand dollars rebounded on Monday as investor moved out of the safe-haven greenback, although a week packed with central bank meetings has set the cautious tone for trading in the reminder of the year.

The Aussie rose 0.4% to $0.6716, after finishing last week down 1.6%, the biggest fall since mid-October.

It faces resistance at the 21-day moving average at 0.6737 and 10-day MA at 0.6753. The kiwi dollar gained 0.1% to $0.6385, having also fallen 0.5% last week.

It is not too far away from its six-month high of $0.6513 hit last week, while facing resistance at 64 cents.

The dollar index fell 0.2% against a basket of currencies on Monday, led lower by the strength in the Japanese yen, which rose 0.6% to 135.91 per dollar.

Kyodo news agency reported on Saturday that Prime Minister Fumio Kishida is aiming to make the Bank of Japan’s 2% inflation target a more flexible goal by revising its decade-old joint statement with the central bank, potentially paving the way for a tweak in the BOJ’s ultra-loose monetary policy.

However, the correction of an almost 10% in the dollar index since late September might be nearing an end, given the hawkish attitude on interest rates from central banks, according to Jonas Goltermann, senior markets economist at Capital Economics.

Australia, New Zealand dollars fly high after soft US CPI

“We continue to think that the conditions for a sustained drop in the dollar are not in place, and we expect a further leg up in the dollar in the first part of 2023,” said Goltermann.

The Aussie failed to get a major boost from China pledging new support to its economy next year as investors seem more focused on the short-term economic and social fallouts from surging COVID cases after Beijing let go of the zero-COVID policy.

In an agenda setting meeting, President Xi Jinping and his senior officials on Friday pledged to shore up China’s battered economy next year by stepping up policy adjustments to ensure key targets are hit.