The Australian and New Zealand dollars edged down on Thursday but traded within familiar ranges as the escalation in Sino-U.S. trade tensions added uncertainty to the investment outlook.
The antipodean currencies were also under pressure against the greenback after the U.S. Federal Reserve provided an upbeat assessment of the world's biggest economy while staying on course to lift interest rates gradually.
In contrast, policy is expected to remain stimulatory in Australia and New Zealand as policymakers in the two countries await a pick-up in inflation and wage growth.
The Australian dollar AUD=D4 was last down 0.3 percent at $0.7382. It has traded in a $0.7311 to $0.7484 range since mid-June, refusing to break out in either direction.
The New Zealand dollar NZD=D4 eased 0.2 percent to $0.6776. The kiwi has found itself in a narrow $0.6688/$0.6859 band since the beginning of this month.
Global financial markets remained focused on the U.S.-driven international trade war, with U.S. administration officials saying on Wednesday that President Donald Trump is proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.
The Aussie is often played as a liquid proxy for the Chinese yuan. China is Australia's No.1 trading partner.
Official data out earlier showed Australia's trade surplus blew past expectations in June as exports to China boomed to their second highest on record.
The data did nothing to help sentiment for the Aussie as traders were more concerned about the deterioration in global trade relations.
"A further escalation of the trade war would hurt Australia in the long-term," said Paul Dales, chief economist at Capital Economics.
"In the second quarter it looks as though net exports made a broadly neutral contribution to the quarterly rate of real GDP growth after having added 0.3 percentage points in the first quarter," Dales added.
"More importantly, if global trade barriers continue to rise, then the external sector will find it harder to support the economy."
Next week, the Reserve Bank of Australia meets for its monthly policy meeting where it is expected to hold rates at a record low 1.50 percent. Its New Zealand counterpart will announce its policy decision on Thursday where it is all but certain to keep rates at 1.75 percent.
New Zealand government bonds
0#NZTSY= were mostly unchanged.Australian government bond futures eased, with the three-year bond contract YTTc1 off 2.5 ticks at 97.845. The 10-year contract YTCc1 slipped 4.5 ticks to 97.2600.
