SYDNEY, Feb 8 (Reuters) - The Australian and New Zealand dollars were trying to sustain a rally on Tuesday as an improved tone in global equity markets and strength in commodity prices offered a break from recent selling.
The Aussie firmed to $0.7131 , having bounced 0.7% overnight and away from support around $0.7050. A break above resistance at $0.7168 is needed to keep the rally going.
The kiwi dollar stood at $0.6635 , after edging up 0.3% and away from support around $0.6590. It needs to clear last week's top of $0.6683 to improve the technical background.
"We stick to the view that the A$ should remain capped by the $0.7140/70 level given the very different stance that the RBA is maintaining versus a wide range of other central banks," said Richard Franulovich, Westpac's head of FX strategy.
"We would look to use weakness towards $0.70 as an opportunity to buy for strength later in the year," he added, noting prices for Australia's major commodities remained strong with coking coal at record peaks and iron ore at a five-month top.
The Reserve Bank of Australia (RBA) continues to argue that inflation is not as much of a threat in Australia as in some other developed nations and it thus has scope to be patient on interest rates.
While markets see a risk the Federal Reserve will hike by a full 50 basis points next month, futures are not priced for an RBA move to 0.25% until June.
Inflationary pressures were evident in NAB's latest survey of businesses as its measure of purchase costs rose at the fastest quarterly pace on record in January.
While business activity took a hit from a surge in coronavirus cases, firms were optimistic the slowdown would be temporary and consumers had plenty of forced savings to splash out.
There was also much relief at the government's decision to re-open Australia's borders to vaccinated tourists from February 21, ending a two-year lockdown.
Editing by Sam Holmes
Source: Reuters