SYDNEY: The Australian and New Zealand dollars heaved sighs of relief on Tuesday as 10-year Treasuries found buyers at the critical 5% level, triggering a pullback in the greenback, with the market also awaiting a speech from the Aussie central bank chief.

The Australian dollar edged 0.1% higher to $0.6343, after a rise of 0.3% overnight, the first daily gain in four sessions.

The 63 cent level is providing strong support while resistance is up at $0.6394.

Australia, NZ dollars vulnerable ahead of data, RBA events

The kiwi dollar was also 0.1% higher at $0.5851, also having rebounded 0.3% overnight to move away from a fresh 11-month low of $0.5809.

Resistance lies around $0.5866. Overnight, the 10-year Treasury yield, a benchmark for borrowing costs around the globe, crossed above 5% but then pulled back, falling to 4.838%.

That triggered a retreat in the greenback, with the dollar index down 0.5% to the lowest in more than a week.

The Australian dollar is also hoping to gain some support from Reserve Bank Governor Michele Bullock’s speech later in the day.

Given the recent hawkish commentary from the central bank, Bullock is likely to keep the door to a November hike open ahead of a crucial reading on third-quarter consumer prices on Wednesday.

Markets imply around a 30% probability of a rate rise to 4.35%, and are almost fully priced for a hike by May next year.

“That brings some short-term upside risk to the AUD… but overall it remains hard for the AUD to ignore the kind of pressures that are coming from weakness in China, the strong USD, geopolitical developments,” said Saxo Asia Pacific Market Strategist Charu Chanana.

Australian bonds rallied from lows on Tuesday, with yields on 10-year government paper falling 10 basis points to 4.698% after hitting a 12-year top of 4.801% on Friday.

They still managed to outperform US bonds, leaving the 10-year yield 15 basis points below Treasuries.