The Australian and New Zealand dollars were stuck in a narrow band on Wednesday, with investors treading cautiously as Washington prepares another round of tariffs on Chinese goods.
The Australian dollar AUD=D3 was last at $0.7345, slightly firmer from Tuesday's low of $0.7321.
The currency had a wild ride late last week amid a major political upheaval that saw the shock exit of Malcolm Turnbull as the country's prime minister.
The Aussie has since stabilised after Scott Morrison, a Turnbull ally, won the top position, although traders were still jittery about the fate of the ruling Liberal-National coalition in upcoming state and federal elections.
In addition, global protectionism continues to be a major overhang.
The United States and China held two days of talks last week without a major breakthrough as their trade war escalated with the activation of another round of duelling tariffs on $16 billion of each country's goods.
The deadline for public comment on U.S. President Donald Trump's increased tariffs on $200 billion of Chinese goods was Sept. 5.
"Admittedly, signs that the U.S. administration is willing to negotiate and accept a compromise on trade will presumably be welcomed in China and Europe," Capital Economics said in a note, referring to the new North American Free Trade (NAFTA) deal.
"But the agreement between the U.S. and Mexico is no guarantee of progress elsewhere," it said, noting the new NAFTA deal was still protectionist.
Analysts generally expect an escalation of Trump's tariff war with China will hit emerging market assets and would generally be negative for global equities.
That in-turn could hurt the Aussie, which has already skidded over 6 percent so far this year, as the currency is used as a liquid proxy for EM growth and China.
Closer at home, data on building approvals and capital expenditure are due Thursday while next week will see a deluge of macroeconomic indicators including second quarter gross domestic product and monthly retail sales.
The New Zealand dollar NZD=D3 was a shade firmer at $0.6712 from Tuesday's low of $0.6677.
Investors will keep a keen eye on ANZ Bank's business confidence data due Thursday. A downbeat result could hurt the currency, which has been on an uptrend since slumping to a 2-1/2 year trough in mid-August.
New Zealand government bonds
0#NZTSY= gained, sending yields 0.5 basis points lower towards the short end of the curve.Australian government bond futures were weaker, with the three-year bond contract YTTc1 off 1.5 ticks at 97.930. The 10-year contract YTCc1 slipped 2 ticks to 97.42.
