The Australian dollar bounced from near 1-month lows on Tuesday as traders grew sceptical there would be an increase in US rates as soon as September, though December remains a possibility. The Australian dollar held at $0.7569, up from a trough of $0.7525 on Monday, its lowest since August 2. The Aussie has been on a downtrend since hitting a near 3-1/2 month high of $0.7760 earlier in August. It has found solid chart support around $0.7530 but a break there could see it touch $0.7450, a level last visited on July 27.
At home, the focus is on capital expenditure and retail sales numbers - both market sensitive releases - due on Thursday. The New Zealand dollar recovered on Tuesday after hitting a two-week low in the previous session. Data released on Tuesday showed New Zealand building consents slipped 10.5 percent in July, but that followed a surge of 21.9 percent the month before and pointed to still strong construction activity.
New Zealand government bonds gained, sending yields 6 basis points lower at the long end of the curve. Australian government bond futures rose in line with US Treasuries, with the three-year bond contract adding 3 ticks at 98.620. The 10-year contract climbed 5.5 ticks to 98.165.
"More of the same for the NZD, grinding higher in the absence of any major news, but vulnerable to downside spikes on global events," said ANZ senior rates strategist David Croy in a research note. Trading was muted with investors unsure when US policy might change. Federal Reserve Chair Janet Yellen said on Friday the case for a rate increase was strengthening, but provided little detail on when it would next move. Dealers also reported talk that the August payrolls report on Friday might miss expectations and make it that much harder for policymakers to contemplate a September tightening.