The Australian and New Zealand dollars consolidated recent gains on Tuesday as investors waited anxiously to hear if any real progress was being made at Sino-US trade talks in Beijing. The Aussie dollar was taking a breather at $0.7134 after running out of puff at $0.7150 resistance, though that remained a world away from last week's "flash crash" low of $0.6715. The next chart targets are $0.7205 and $0.7250.

The kiwi dollar had likewise paused at $0.6745 and faces stiff resistance around $0.6690. In local bond markets, futures had stabilised after a huge rally in recent weeks. The three-year bond contract edged off 3.5 ticks to 98.195, having hit its highest since late 2016 last week.

The 10-year contract dipped 4.5 ticks to 97.6850, but is still up almost 50 ticks from early November.

US Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that "we can live with" as dozens of officials resumed talks.

Markets had been encouraged at the surprise appearance of Chinese Vice Premier Liu He at the meetings.

"The talks were supposed to be between mid-tier bureaucrats, so the appearance of one of China's most senior officials signalled China's eagerness to end the trade war," said Marshall Gittler, chief strategist at ACLS Global.

"We could have a breakthrough, leading to a rally in the Aussie and kiwi."

Copyright Reuters, 2019