The Australian and New Zealand dollars edged up on Tuesday as investors wagered that US President Donald Trump's threatened tariffs might not prove as disruptive as first feared, reviving the appetite for risk. The Aussie dollar crept up 0.2 percent to $0.7780, off last week's two-month trough at $0.7713, supported by a bounce in Asian share markets as Trump faced growing pressure from political and nation-state allies to pull back from proposed steel and aluminium tariffs.
There was little reaction to the Reserve Bank of Australia's widely-expected decision to leave interest rates at 1.5 percent, but there were concerns the Aussie could come under pressure as the RBA sounded a cautionary note on growth at its monthly policy meeting. "We would expect to see some softening in the Aussie as markets digest what appears to be a tweak in the RBA's GDP growth forecast over the next couple of years from 'to average a bit above 3 percent' to 'faster in 2018 than it did in 2017'," said Westpac's head of financial market strategy, Robert Rennie.
The kiwi dollar firmed 0.15 percent to $0.7235, slowly edging away from its recent low at $0.7186. New Zealand government bonds eased, sending yields 4.5 basis points higher at the long end of the curve.
Australian government bond futures slipped in line with Treasuries. The three-year bond contract eased 4 ticks to 97.885, while the 10-year contract lost 7 ticks to 97.2000. Figures due Wednesday were forecast to show Australia's gross domestic product (GDP) expanded by around 0.6 percent in the December quarter. But following recent disappointing economic indicators, analysts are now looking for a rise of around 0.5 percent, with annual growth slowing to 2.4 percent.