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Australia dollar gets helping hand from domestic data, NZ$ slips
[SYDNEY] The Australian dollar crept away from four-month lows on Tuesday as a surprisingly strong survey of business activity at home helped salve the sting from disappointing Chinese data.
The Aussie dollar nudged up to US$0.7630, from a trough of US$0.7609, though the technical background remained bearish following the initial break of support around US$0.7625/30 overnight.
It got a helping hand when the latest survey of businesses from NAB showed them enjoying the best conditions in two decades with sales and profits surging in October.
The upbeat outcome will be a comfort to the Reserve Bank of Australia (RBA), which last week reaffirmed its outlook for an acceleration in economic growth even as it trimmed forecasts for inflation.
George Tharenou, an economist at UBS, cautioned the spike in the survey to boom levels was somewhat "inexplicable" given softness in consumer spending and inflation.
"That said, the strength of business conditions can't completely be dismissed as 'noise'," he said, adding it underlined the case for keeping interest rates steady for a long time to come.
The survey also helped offset data on Chinese retail sales and industrial production that missed market forecasts, suggesting the economy may be loosing some steam as Beijing cracks down on debt risks and pollution.
Investors often use the Aussie as a liquid proxy for Chinese wagers, reflecting in part the Asian giant's position as Australia's single biggest export customer.
New Zealand's commodity-linked currency is also sensitive to signals on Chinese demand and slipped in the wake of the data.
The kiwi eased 0.4 per cent to chart support at US$0.6875 and was heading for a fourth straight session of losses.
A break here would likely see a return to recent lows at US$0.6818, which is an important chart level. A breach of that would be a very bearish signal, taking the currency to ground not visited since mid-2016.
Australian government bond futures eased and the yield curve flattened in line with moves in US Treasuries.
The three-year bond contract slipped five ticks to 97.990, while the 10-year contract eased 2.5 ticks to 97.3350.
New Zealand government bonds also fell in price, nudging yields up one to two basis points.