Aussie, kiwi rebound as Trump's tariff threats pressure US dollar

SYDNEY, Jan 20 (Reuters) - The Australian and New Zealand dollars held on to gains on Tuesday as U.S. President Donald Trump's threat to impose tariffs on Europe over Greenland rekindled "sell America" fears, putting renewed pressure on the greenback.

The two Antipodean currencies, often sold as proxies for global risk sentiment, initially fell as stocks slid on Monday but quickly reversed those losses. Attention is now turning to U.S. markets later in the day, with investors watching how Wall Street reacts after the long holiday weekend.

The Aussie was last steady at $0.6710 AUD=D3, having gained 0.4% overnight to bounce off a key support level around $0.6662. It now faces resistance at $0.6727, with a 15-month peak at $0.6766.

"There was that little bit of a "sell America" narrative, which kind of crept back into the market... you know the U.S. dollar started to turn over, basically," said Ray Attrill, head of FX strategy, National Australia Bank.

"The other thing that I would mention is that China. We did see the dollar/renminbi rate falling to a new cycle low... So, I think that provided a little bit of a tailwind as well for the Aussie."

Investors' focus was also on the sale of a new 2037 Treasury bond by the Australian government, which will be priced on Wednesday. Investor demand has been strong, with the early order book topping A$42 billion, compared with previous sales of around A$15 billion.

Ten-year government bond yields AU10YT=RR climbed 4 basis points to 4.773% on Tuesday, marking a third consecutive day of increases, as investors sold U.S. Treasuries as well as the dollar.

The kiwi was buoyant at a two-week high of $0.5805 NZD=D3, after jumping 0.8% overnight. It is, however, still stuck in the recent trading range, with near-term resistance around $0.5810 and $0.5853.

A slew of local data, including business surveys and partial price indicators, has surprised on the upside, bolstering expectations that the economic recovery in New Zealand is gaining momentum after aggressive policy easing in recent years.

Focus now turns to fourth-quarter consumer inflation data, due on Friday, with risks tilted to the upside. Economists polled by Reuters forecast a 0.5% quarterly increase, which would leave annual inflation at 3%, the upper end of the central bank's 1%–3% target band.

Markets imply almost no chance of a rise in the 2.25% cash rate from the Reserve Bank of New Zealand on February 18, with little prospect of a move until July, which is over 50% priced. 0#NZDIRPR