SYDNEY - The Australian and New Zealand dollars struggled for traction on Tuesday as investors wondered what, if any, progress was being made in Sino-U.S. trade talks, while Australian policy makers again signalled they were ready to cut rates if needed.

The Aussie was a shade firmer on the day at $0.6785, but bound between last week's low of $0.6710 and the top of $0.6810 briefly touched on Friday when trade optimism was at its height.

Since then, the market mood has turned more cautious with Beijing notably silent on whether a deal had actually been agreed, or what it might contain.

U.S. Treasury Secretary Steven Mnuchin said on Monday that an additional round of tariffs on Chinese imports will likely be imposed in December if a deal was not reached by then, though he still expected an agreement.

The economic risks from the trade standoff were cited by the Reserve Bank of Australia (RBA) as one reason why it decided to cut interest rates earlier this month.

Minutes of its October meeting released on Tuesday showed the bank's Board discussed several arguments for staying pat but in the end decided a cut was needed to safeguard the outlook for growth and employment. 

Futures imply around a 34% probability 0#YIB: of another cut in November, with December seen as a 76% chance. "Labour market data remains the key to the timing of policy moves," said CBA economist Belinda Allen.

"We favour February for the next move, but an unemployment rate drifting further away from the RBA's goal of full employment could see another rate cut this side of the New Year."

Jobs figures for September are due out on Thursday and are expected to show the unemployment rate held at a one-year top of 5.3%, even as jobs continue to expand at a healthy pace.

Yields on three-year bonds got down as deep as 0.567% in the wake of the last policy easing, before the latest bout of trade optimism lifted them to 0.687%. At the start of this year, they had been up at 1.82%.

The three-year bond futures contract YTTc1 was trading 1 tick firmer on Tuesday at 99.325, while the 10-year contract YTCc1 added 2 ticks to 98.9750.

Across the Tasman, the New Zealand dollar was a touch firmer at $0.6307, but again caged between support at $0.6277 and resistance around $0.6354.

The market was on hold for consumer price figures due on Wednesday which are forecast to show annual inflation slowed to 1.4% in the third quarter, from 1.7% the previous quarter.

"The focus for inflation is on the future, and following disappointing business confidence figures, the future for growth and inflation looks weaker," said Jarrod Kerr, chief economist at Kiwibank. "More needs to be done now to lift inflation in the future."

He predicts rates will be cut by a quarter point to 0.75% in November, with a final move to 0.5% early next year.

(Editing by Shri Navaratnam) ((Wayne.Cole@thomsonreuters.com; 612 9321 8162; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))