Aussie cheered by upbeat data, bond yields rise

[SYDNEY] The Australian dollar rebounded from three-month lows and bond prices fell on Tuesday following encouraging economic data, dragging the New Zealand dollar higher. Yet, both currencies were on track with hefty monthly losses.

The Australian dollar bounced around half a US cent to US$0.7239, pulling away from US$0.7145 touched last week.

The Aussie jumped 0.8 per cent against the yen, while the euro slumped one full cent to A$1.5400.

The move up came after first quarter balance of payments data showed net exports could add a larger than expected 1.1 percentage points to gross domestic product (GDP), which will be released on Wednesday.

Analysts, polled last week, forecast the economy grew by 0.6 per cent in the March quarter.

"Stronger-than-expected Q1 GDP inputs and buoyant April building approvals saw the AUD jump," said Annette Beacher, chief Asia-Pac macro strategist at TD Securities.

Ms Beacher also noted Interbank futures fell by as much as 15 basis points and are no longer fully priced for an easing in interest rates on a 12-month horizon.

The Reserve Bank of Australia (RBA) holds its monthly policy review on June 7 and the market is giving a 6 per cent chance of a move to a record low of 1.5 per cent.

The Aussie, however, was still expected to post a 5 per cent drop this month, the biggest in nearly a year.

Australian government bond futures retreated, with the three-year bond contract off four ticks at 98.350. The 10-year contract shed 2.5 ticks to 97.7000, while the 20-year contract was 1.5 tick lower at 97.1050.

Aussie strength helped the New Zealand dollar firm to US$0.6726, having survived a test of a support level at US$0.6700 earlier.

A private survey by ANZ showed that New Zealand consumer confidence had risen moderately, which could provide optimism to investors, though there was no initial boost to the Kiwi in the wake of the survey release.

New Zealand government bonds gained, sending yields 1.5 basis points lower at the short end of the curve and 0.5 basis points lower at the long end of the curve.

REUTERS