Australia, NZ dlrs put on defensive by frail global data

The Australian and New Zealand dollars were fighting a rearguard action on Tuesday after dismal data from China and the United States rekindled worries about a global downturn and undermined commodity prices.

The Aussie was struggling at $0.7022 AUDUSD, having slid 1.4% overnight and a long way from last week's two-month high of $0.7136. Chart support lies around $0.7000, with resistance at $0.7046.

The kiwi dollar was hovering at $0.6365 NZDUSD, after losing 1.5% overnight. It has support around $0.6350 while resistance is up at the recent two-month top of $0.6468.

Both had been sideswiped on Monday by a raft of weak economic data out of China, coupled with dire readings on New York manufacturing and U.S. home building.

Investors reacted by marking down prices for copper, iron ore and oil, while boosting bonds on speculation central banks may not have to tighten so much.

Australian three-year bond yields (AU3YT=RR) were back at 3.01%, after ending last week at a three-week high of 3.16%.

Markets also slightly lengthened the odds on the Reserve Bank of Australia (RBA) hiking rates by 50 basis points in September, with swaps leaning toward a quarter-point move. (0#RBAWATCH)

Minutes of the RBA's August policy meeting out on Tuesday reiterated that more hikes were likely, but that it was important to keep the economy on an "even keel" and that global risks were skewed to the downside.

"The Minutes today imply that the Board is getting closer to the point at which the RBA will pause in their tightening cycle," said Gareth Aird, head of Australian economics at CBA.

"Our central scenario is for the RBA to raise the cash rate by 50bp at the September Board meeting, but this is certainly not a done deal," he added, noting data on wages and jobs this week could have an impact.

Wage growth is seen picking up moderately to 2.7%, though that would be the highest since 2013, while unemployment is forecast to stay at a 48-year low of 3.5%.

An added argument for a half-point hike came from a new monthly measure of consumer prices by the Australian Bureau of Statistics which showed inflation hit 6.8% in June, compared to the 6.1% reported in the quarterly data.

The Reserve Bank of New Zealand (RBNZ) is still considered likely to hike rates by 50 basis points to 3% at its policy meeting on Wednesday, but there was some chance it might temper its projection for further increases.