Australian dollar hits near 3-month peak on trade boom, NZD hangs on

[SYDNEY] The Australian dollar climbed 0.5 per cent on Thursday to a near three-month peak as the country boasted its biggest trade surplus on record in December, led by surging commodity prices.

The Australian dollar went as far as US$0.7631, the highest since Nov 10. It also broke above key chart resistance of US$0.7610/20, paving the way for US$0.7720/40.

Official data on Thursday showed a trade surplus of A$3.51 billion (S$3.78 billion) in December, handily outpacing forecasts of A$2.2 billion. The previous month was also revised up sharply to A$2 billion.

The windfall could lessen the risk of a downgrade to Australia's triple A credit rating and ripple through the economy via higher profits, incomes and tax receipts.

"A record trade surplus shows that the surge in commodity prices is boosting nominal GDP," said Paul Dales, chief economist at Capital Economics.

"The most recent increases in the volume of exports implies that real GDP in the fourth quarter of last year at least may prove to be a bit stronger than we had thought."

The Aussie and its New Zealand counterpart have had a strong run against the greenback so far this year, surging 6 per cent and 5.3 per cent respectively.

Meanwhile, the greenback has sagged, with investors becoming increasingly risk averse due to US President Donald Trump's protectionist policies.

The greenback received some support after the Federal Reserve presented a relatively upbeat view of the US economy at its first meeting since Mr Trump took office.

Elsewhere, the Aussie did well against other currencies. The euro slipped 0.4 per cent on the Aussie, while the pound was off 0.3 per cent. The Aussie inched up 0.3 per cent on the yen.

The New Zealand dollar edged 0.2 per cent higher to US$0.7295, but still short of a 2-1/2 month high touched earlier this week.

The currency fell 0.5 per cent on Wednesday after data showed the country's jobless rate jumped and wage growth remained sluggish, prompting investors to pare back the chance of a rate hike.

New Zealand government bonds eased, sending yields up about 2.5 basis points at the long end of the curve.

Australian government bond futures fell, with the three-year bond contract down three ticks at 98.020. The 10-year contract was off five ticks to 97.185.

REUTERS