SYDNEY, March 16 (Reuters) - The Australian and New Zealand dollars were little changed against the greenback on Tuesday as the market waited to see whether the U.S. Federal Reserve March 17 monetary policy decision addresses the recent spike in bond yields.
The Aussie dollar was trading only three basis points lower at $0.7752, in between its seven-week range of $0.75 and $0.80. It faces resistance at $0.7787 and has support at around $0.7714.
The New Zealand dollar was unchanged at $0.7199, far from its 2 1/2-year high of $0.7464 on Feb. 25, but also away from its recent trough of $0.7100 on Feb. 5.
“The market is really sitting tight waiting for the Fed decision, because the huge move in U.S. bond yields has been so key that the market really needs to see what they plan to do,” said Steven Dooley, APAC currency strategist at Western Union Business Solutions.
While there are some expectations that the Fed might try to calm bond markets - yields have risen some 60 bps since the last Fed meeting - the consensus view is Fed Chief Jerome Powell will not make changes to policy settings.
“However, if they start to take some kind of policy action, like buying bonds further down the curve to push yields lower, then we could see the U.S. dollar move sharply lower and the Australian dollar press higher.
In Australia, the release of the central bank’s March meeting minutes, where it reiterated rate increases would be unlikely until at least 2024, had little impact on the currency.
Yields on Australian three-year government bonds were little changed at 0.103%, far from the 0.188% they jumped to late last month during a global bond sell-off.
The three-year government bond futures contract was slightly lower at 99.73 while the 10-year contract was five ticks higher at 98.255.
New Zealand government bonds were trading higher with yields 6-8 basis points lower at the long end of the curve.
(Reporting by Paulina Duran in Sydney; Editing by Christopher Cushing)