SYDNEY/WELLINGTON: The Australian and New Zealand dollars bounced on Monday after upbeat Chinese trade data and buoyant Asian shares lifted appetite for riskier assets such as commodity currencies.
The Aussie rose as far as $0.9145 in early trade, well off a three-month low of $0.8989 plumbed last week. It was last at $0.9125, up 1.5 percent since Friday's low. Resistance was found at $0.9169 and then $0.9200.
Much of the rise came after data released on Sunday showed robust trade numbers from regional powerhouse China, Australia's key export market.
China's exports handily beat forecasts in November, while imports of Australian goods hit a record high.
That should be positive for many commodities with China importing a record amount of iron ore, Australia's single biggest export earner.
Prices for the steel-making mineral have been surprisingly firm around $139 a tonne recently.
Further supporting the Aussie was a lower-than-expected inflation reading in China, adding to recent evidence of a stabilisation in the world's second-largest economy.
The market often uses the Aussie as a liquid proxy to hedge against weakness, or wager on strength, in China. Also helping was buoyant stock markets in China, Korea and Japan, which also benefited the New Zealand dollar.
The kiwi jumped to a three-week high of $0.8321, from $0.8283 late on Friday in New York. Support is seen at $0.8250 and below that $0.8220, with $0.8330 as resistance. Attention is now turning to the Reserve Bank of New Zealand's final rate review of the year.
No move is expected on Thursday, but the central bank is seen on the cusp of tightening from a record low 2.5 percent, with most in the market anticipating the first rise will be in March.
"While the RBNZ is likely to highlight the strength of the NZ dollar as a risk to the economy, it's being usurped by strength across the general economy, which means the official cash rate is heading up," ANZ Bank economists said in a market note.
The prospect of higher interest rates is likely to support the kiwi against most majors, where rates are static or may even face the prospect of further easing. However, in due course the Federal Reserve's move to start scaling back its easy money policies would be a headwind.
On the cross rates, the kiwi had a firm tone, with the Aussie close to a five-year low at NZ$1.0978.
It rose around 0.4 percent against the yen near an eight-month peak at 85.36 yen.
Domestic data showed a rise in manufacturing sales volumes for the first time in three quarters, which backed views of a solid third quarter of growth. New Zealand government bonds were a touch firmer, pushing yields as much as 3 basis points lower along the curve.
Australian government bond futures bounced off lows with the three-year bond contract up 2 ticks at 96.860. The 10-year contract added 3 ticks to 95.660, having touched the lowest in two years.
It broke through key support at 95.600 after the strong jobs report in the United States on Friday saw a brief surge in US Treasury yields on speculation the Federal Reserve could pare back its stimulus this month.
The next major support is at 95.325, the October 2011 low.
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