Australia dollar lifted by upbeat data, kiwi firm

[SYDNEY] The Australian dollar got a lift from upbeat domestic data on Tuesday, while its New Zealand cousin hit a fresh three-month top as the US dollar ran into a sudden bout of Asian selling.

The Aussie dollar gained 0.22 per cent to US$0.7857, but again shied away from stiff chart resistance at US$0.7884/7898, which marks a double top from October.

The Aussie hopped up after data showed approvals to build new homes surged 11.7 per cent in November to a 15-month peak, a surprisingly strong result that suggested activity in the sector would support economic growth for a while yet.

"Leading indicators such as finance for the construction or purchase of new housing continue to point toward further increases in approvals," said Daniel Gradwell, a senior economist at ANZ.

"It seems pretty clear to us that any fears of weaker dwelling construction in 2018 are misplaced."

Dealers also noted heavy selling of US dollars for yen after the Bank of Japan trimmed the amount of Japanese government bonds bought at a regular operation.

Speculators took the change as a hint the BOJ might be scaling back its asset buying campaign, even though the amounts involved were tiny. The US dollar quickly fell from 113.17 yen to 112.50, dragging it down across the board.

The euro also took a hit on the yen, which in turn pulled it down to a two-month low on the Aussie at A$1.5221.

The kiwi briefly made a new high at US$0.7197, before returning to US$0.7174.

"The NZD is still hanging in there," said Sharon Zollner, chief economist at ANZ Bank in a research note.

"With market positioning still short, and decent flow demand, the direction of risk appears skewed to further squeezes higher, at least in the near term."

New Zealand government bonds were little changed, while Australian bond futures eased a touch on the upbeat building data.

The three-year bond contract dipped 1.5 ticks to 97.870, while the 10-year contract fell two ticks to 97.33.

REUTERS