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Aussie slightly firmer after China data, NZ dollar up

Thursday, September 8, 2016 - 14:08

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The Australian dollar got a small lift on Thursday after China's August imports unexpectedly rose for the first time in 22 months in a sign that demand in the world's second-largest economy was picking up.

[SYDNEY] The Australian dollar got a small lift on Thursday after China's August imports unexpectedly rose for the first time in 22 months in a sign that demand in the world's second-largest economy was picking up.

The Australian dollar rose as high as US$0.7687, not too far from a three-week top of US$0.7698 touched on Wednesday, after the positive news from Australia's number one trading partner.

The Aussie has been flirting with 77 US cents, a key resistance level on the charts, but has failed to trade above it.

"Recently, every time the Aussie has moved above that level, it has been hammered back down," said Sydney-based Greg McKenna, chief market strategist at AxiTrader.

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The Aussie briefly traded around that level in mid-August when it hit a more than three-month high of US$0.7760 but then lost 2.4 per cent within two weeks.

"Last night's high of US$0.7698 again reinforced that traders are wary of the supply zone around 77 cents where sellers have been consistently lurking," Mr McKenna added.

Still, the Aussie has been among the best performing G10 currencies this year, rising 5.4 per cent thanks in large part to offshore interest in carry trades - where investors borrow at low rates in yen or euros to buy higher-yielding assets.

Also helping are recent robust domestic data showing a quarter century of economic expansion and signs of recovery outside mining.

On Thursday, data showed Australia's July trade deficit was slightly better than expected at A$2.41 billion (S$2.49 billion).

The New Zealand dollar was trading up 0.12 per cent at 0.7456. It has risen 16 per cent since mid-January as the "economy accelerated, interest rates look fabulous for investors in a relative comparison, and our commodity prices are recovering," said ANZ senior economist Sharon Zollner.

New Zealand government bonds were mixed, with yields one basis point lower at the short end and 1.5 basis points higher at the long end.

BNZ FX Strategist Kymberly Martin said a recent run of upbeat data had led her to revise up forecasts for second-quarter economic growth, data for which is due next week.

"If delivered, we believe this could see NZ short-end swaps push higher," said Ms Martin.

Australian government bond futures eased, with the three-year bond contract down two ticks at 98.57. The 10-year contract was off 2.5 ticks at 98.135.

REUTERS

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