By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, June 13 (Reuters) - The Australian and New Zealand dollars flirted with multi-week highs against their U.S. counterpart on Tuesday, even as investors fully expect the Federal Reserve to lift interest rates in a day's time.
The Australian dollar AUD=D4 rose to $0.7560, from $7542 on Monday. A break above $0.7568 targets the 61.8 percent of the $0.7750-$0.7329 move at $0.7590. Support was found near $0.7515.
The Aussie has bounced 1.7 percent so far this month, partly due to U.S. dollar softness and a resilient economy. Data last week showed Australia's economy grew 0.3 percent in the first quarter to record nearly 26 years without a recession.
"The data flow out of Australia has continued to confound the doomsayers on the economy," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
A private survey showed Australian business conditions eased just a touch from decade highs in May, with growth reported across all sectors. the U.S. Fed is considered almost certain to hike rates on Wednesday, the move has long been priced in. Instead, markets have taken account of recent softness in inflation and lengthened the odds on a further move this year.
As a result, yields on 10-year Treasury paper US10YT=RR have fallen steadily to stand at 2.21 percent compared to a peak of 2.62 percent in March.
Underpinning the Aussie was weakness in sterling which dropped to the lowest in two months at A$1.6718 GBPAUD=R .
The pound has shed around 9 cents in the past month and dealers expect further pressure after last week's election left the Conservative Party without a majority in parliament.
A break under A$1.6500 would open the way to a retracement all the way to the March trough of A$1.5892.
Likewise, the pound skidded to NZ$1.7517 GBPNZD=R , the lowest in nearly three months. It has fallen around 14 cents in the past month.
Against its U.S. counterpart, the New Zealand dollar NZD=D4 rose to $0.7219, from a low of $0.7171 on Monday. A sustained break above the $0.7215 region, would target a retracement to the 2017 peak of $0.7375.
At home, investors were waiting for New Zealand's current account balance on Wednesday and first-quarter gross domestic product data on Thursday. ECONNZ
Con Williams, an economist at ANZ, says the kiwi could gain support from a contained current account deficit and annual growth of 3 percent or more. ECONNZ
New Zealand government bonds 0#NZTSY= were largely steady along the curve.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 off 1.5 ticks at 98.230. The 10-year contract YTCc1 was a fraction firmer at 97.5650. (Editing by Kim Coghill)