US and Chinese officials expressed hopes on Monday that a new round of tariff discussions would bring them closer to easing their seven-month trade war. The Aussie dollar inched up to $0.7074, just a whisker above a five-week trough of $0.7054 which also marks major chart support. The next technical bulwark is in the $0.7017/7025 area.
The New Zealand dollar eased to $0.6728, nearing major support around $0.6707, as speculators wagered the Reserve Bank of New Zealand would take a cautious stance at its policy meeting on Wednesday. Yields on two-year government debt have already dived to their lowest in modern history at 1.61 percent, well below the 1.75 percent cash rate.
Australian bond yields are near their lowest since late 2016, with three-year yields at 1.668 percent moving closer to the 1.5 percent overnight rate. The 10-year futures contract was off 4.5 ticks on Tuesday at 97.8950. Domestic economic data were mixed and did nothing to change the market's dovish outlook for interest rates.
A closely-watched survey of Australian business showed a welcome bounce in January after an alarmingly sharp drop the month before, but still pointed to cooling growth ahead. The National Australia Bank's index of business conditions, released on Tuesday, rose 4 points to +7 in January. That recovered around half of December's steep slide and left it just above the long-run average of +6.