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Australia dollar slips on disappointing data, kiwi near 2-1/2 week highs
[SYDNEY] The Australian dollar eased on Wednesday after fourth-quarter data showed construction spending unexpectedly fell, adding to evidence of slowing domestic economic momentum while New Zealand's currency hovered near a 2-1/2 week peak.
The Aussie slipped 0.1 per cent to US$0.7180 as official figures showed the value of construction work done slumped 3.1 per cent in the December quarter, confounding expectations for a 0.4 per cent rise.
This marked the second straight quarter of sharp falls and challenges the Reserve Bank of Australia's (RBA) dogged optimism growth will pick up this year.
"Australia's construction activity...will be a drag on gross domestic product (GDP) growth," ANZ said in a note.
"While there is still a considerable amount of work in the pipeline for public engineering and residential construction, the weakness in H2 2018 has been more marked than we expected," the bank said.
"And if this points to an earlier and sharper turn in the cycle than we expected, it would suggest downside risks to our outlook."
The GDP report for the December quarter is due on March 6 and economists generally expect annual growth of around 2.7 per cent from 2.8 per cent in the third-quarter.
The Aussie has become more sensitive to macro data since the RBA opened the door for a policy easing earlier this month, effectively abandoning its long-held tightening bias.
Across the Tasman Sea, the New Zealand dollar took a breather near a 2-1/2 week peak at US$0.6889 after three straight sessions of gains. The currency had rallied on signs of progress in the protracted Sino-US trade dispute which is seen as a positive for world trade and commodity prices.
Major chart resistance for the kiwi is seen around US$0.6942, with immediate support at US$0.6864.
New Zealand government bonds eased, sending yields higher across the long-end of the curve.
Australian government bond futures gained, with the three-year bond contract and the 10-year contract rising 2.5 ticks each to 98.365 and 07.935 respectively.