By Cecile Lefort
WELLINGTON, Sept 15 (Reuters) - The Australian and New Zealand dollars held recent gains on Tuesday with markets reluctant to make big bets ahead of a important policy meeting by the U.S. Federal Reserve later in the week.
The Australian dollar AUD=D4 stood at $0.7125, having defied sliding commodity and Chinese stock prices. It climbed to a two-week peak of $0.7166 after the country's ruling party ousted unpopular prime minister Tony Abbott in a leadership challenge. ID:nL4N11L0GC
As new Prime Minister-in-waiting Malcolm Turnbull vowed to set a new economic agenda, economists expect the new leader to boost sentiment.
"The possibility of sustained stronger business confidence reduces the odds of further easing and at the very least is likely to keep the Reserve Bank of Australia on the sidelines for longer," said Su-Lin Ong, a senior economist at RBC Capital Markets.
Debt futures have pushed out the prospect of another cut by the Reserve Bank of Australia, giving less than 50-50 percent chance of a move by December, from around 60 percent last week.
Minutes of the central bank's Sept. 1 policy meeting only reinforced expectations of a steady rate outlook with the central bank reiterating that the Board judged it was appropriate to leave the cash rate unchanged. ID:nRUAFKEB97
Earlier this month, the RBA left rates unchanged at a record low of 2 percent.
This week's focus is on the Fed with markets still guessing whether the central bank will hike rates then, or opt for December or early next year.
This has kept the New Zealand dollar NZD=D4 on the sidelines around $0.6320, little changed for the third consecutive session. Investors were also awaiting important local economic data.
A milk auction by dairy giant Fonterra and current account figures will be released on Wednesday, while gross domestic product figures will follow on Thursday. ECONNZ
Resistance for the kiwi was found at $0.6345 with support at $0.6300. The kiwi dropped below 62 cents last month, a level not seen since 2009.
New Zealand government bonds 0#NZTSY= were a touch softer.
Australian government bond futures retreated, with the three-year bond contract YTTc1 off 4 ticks at 98.070. The 10-year contract YTCc1 was down 1.5 tick to 97.2600, leading to a bearish flattening of the curve. (Editing by Shri Navaratnam)