WELLINGTON/SYDNEY: The Aussie dollar jumped one percent against the US dollar and yen on Wednesday, bolstered by surprisingly strong economic growth data that may lessen the need for further deep interest rate cuts. The robust data pulled the New Zealand dollar higher.
The Australian dollar leaps as high as $0.9853, from $0.9743 in NY, last trades at $0.9848. Against the safe-haven yen, it jumps nearly one yen to 77.50 yen, from 76.63.
Aussie up 1 pct on the day vs both greenback and yen, well off October lows of $0.9581 and 74.42 yen hit last week. Resistance found at $0.9898, the May 29 high.
The New Zealand dollar climbs to a session high of $0.7624, up 0.7 pct on the day, pulling further away from a six-month low of $0.7456 hit late last week.
Australia's economy grew a surprisingly strong 1.3 pct last quarter as spending by households and businesses far outpaced expectations. Growth was also a robust 4.3 pct higher compared to the first quarter of 2011.
Interbank futures slide as the market scaled back expectations of deep interest rate cuts. Swap markets now imply a one-in-four chance of a 50bps rate cut in July, from 50-50 before the data.
On Tuesday, the Reserve Bank of Australia eased rates by 25bp to 3.5 pct in part due to disappointing domestic growth but mostly because of the grim global outlook.
Antipodean currencies have been hit hard since the escalation of Europe's debt crisis, tumbling between 6 and 8 pct since late April.
Aussie debt futures retreat from Monday's historical highs with the three-year contract 0.16 points lower at 97.650, while the 10-year contract off 0.11 points at 97.005.
Traders say the Aussie and the kiwi were also boosted after dovish comments from Chicago Federal Reserve President Charles Evans. There is growing speculation the Fed may launch more quantitative easing to stimulate the economy, which would be negative for the US currency.
Also providing some support to the kiwi is a 13.5 percent bounce in global dairy prices at the latest Fonterra auction, lifting prices from around three-year lows. Dairy accounts for around a quarter of NZ exports.
Kiwi boosted after it breaks above its 200-hour moving average at $0.7566, although further intraday gains were capped at $0.7627, its 21-day moving average. Technical support seen at $0.7520, around the low hit the previous day.
New Zealand government debt prices ease, sending yields up to 11 basis points higher.
Still, the yield on the 2023 bond hovers around 3.375 percent, near a lifetime low around 3.275 percent hit on Tuesday, as ongoing signs the New Zealand economy is struggling to recover keeps domestic demand high for safe-haven government debt.
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