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Aussie wobbles on weak trade data, NZ dollar at 3-month high

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The Australian dollar came off a six-week peak on Thursday after the country's trade surplus for April shrank far more than expected, while its New Zealand counterpart rose to a three-month high.

[SYDNEY] The Australian dollar came off a six-week peak on Thursday after the country's trade surplus for April shrank far more than expected, while its New Zealand counterpart rose to a three-month high.

The Australian dollar slipped as low as US$0.7522 at one stage, off from a US$0.7568 top touched on Wednesday, before steadying at US$0.7541.

The Aussie's recent uptrend remained intact, with gains of 1.4 per cent this month. That compares with drops in March, April and May.

The pullback came after data showed Australia's trade surplus shrank 82 per cent to A$555 million (S$577.40 million) in April. That was the lowest in six months and far below forecasts of A$1.9 billion.

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Exports of coal alone fell 45 per cent as a powerful tropical cyclone that hit Queensland in late-March tore up rail tracks, causing weeks of disruption in the country's biggest coal region.

"This is a poor start to the June quarter. It follows a disappointing March quarter," Westpac economist Andrew Hanlan said.

Data published on Wednesday showed Australia's first-quarter gross domestic product (GDP) rose 0.3 per cent, a sharp pullback from December quarter's brisk 1.1 per cent gain from the previous three months. The annual pace braked to a more than seven-year low of 1.7 per cent.

The Aussie slipped on the pound ahead of Thursday's general elections in Britain. Opinion polls on Wednesday suggested that Prime Minister Theresa May's party is on course to increase her majority in parliament.

Investors are of the view that a clear win would give Mrs May more bargaining power in Brexit negotiations, perhaps leading to a deal that's more favourable to British industries and markets.

The New Zealand dollar rose to US$0.7212, from US$0.7169 the previous day, a windfall from a weaker US dollar and a strong domestic economy. The currency faces technical resistance in the US$0.7237/46 zone.

"Everything locally is running in the NZD's favour, with the terms of trade flirting with record highs and the economic cycle maintaining its momentum," ANZ said in a research note.

New Zealand government bonds eased, sending yields two basis points higher.

Australian government bond futures slipped, with the three-year bond contract down one tick at 98.26 and the 10-year contract off three ticks to 97.56.

REUTERS

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