Australia, NZ dollars near 10-mth peaks on upbeat China data

[SYDNEY] The Australian and New Zealand dollars edged towards multi-month peaks against the greenback and sterling on Friday after a run of encouraging data from China fortified risk appetite.

The Australian dollar rose to US$0.7714, near a 10-month summit of US$0.7737 touched on Thursday. It has gained more than 2 US cents this week, in part after the domestic jobless rate fell to 5.7 per cent, the lowest since late 2013.

Helping was data showing China's economy grew 6.7 per cent in the first quarter, from a year earlier, assuaging bears who had been worried about strength in the Asian giant.

The Aussie is sensitive to news out of China, Australia's top export market.

A strong Aussie, up around 6 per cent this year, will not entirely please the Reserve Bank of Australia (RBA), which is relying on a competitive currency to boost non-mining sectors such as education and tourism.

The higher the Aussie, the more risk the RBA may resume cutting interest rates.

"(Next week) the RBA has two opportunities to jawbone this lofty AUD," said Annette Beacher, chief Asia-Pac macro strategist at TD Securities, referring to the minutes of the April policy meeting and a speech by Governor Glenn Stevens both due on Tuesday.

For now, however, interbank futures imply just a one-in-four chance of an easing by June.

The Aussie stood tall against the pound which eased to A$1.8334, within a whisker of a 17-month trough of A$1.8294 set overnight. Sterling has skidded nearly 10 per cent this year on growing worries that Britain may elect at a June 23 referendum to leave the European Union.

The pound held near its lowest in almost a year against the kiwi at NZ$2.0577.

The New Zealand dollar rose 0.3 per cent to US$0.6876 after US inflation proved softer than expected and so lessened the urgency for another hike by the Federal Reserve.

"The CPI report overnight did not look to provide the smoking gun that some were looking for to posit the Fed is behind the curve," said ANZ Bank Senior FX Strategist Sam Tuck.

He saw the Kiwi trading a range of US$0.6830 to US$0.7030 with the focus shifting to New Zealand inflation data on Monday.

New Zealand government bonds gained, with yields moving one to 1.5 basis points lower across the curve.

Australian government bond futures extended losses, with the three-year bond contract off four ticks at 98.040. The 10-year contract shed two ticks to 97.4600, while the 20-year contract lost 1.5 ticks to 96.8800.

REUTERS