The Australian and New Zealand dollars rose against their US counterpart on Thursday as buoyant equities whetted risk appetites, sending the yen to an 11-month low against the kiwi. The Australian dollar edged up to $0.7490, from a trough of $0.7417 touched on Wednesday. It has proved resilient to two sets of surprisingly weak data at home, including a A$1.5 billion trade deficit.
On Wednesday, figures showed the economy shrank for the first time since 2011, raising the possibility of a recession following 25 years of uninterrupted growth. The Aussie managed to briefly pierce stiff resistance at 75 cents to reach the highest level in three-weeks. A sustained break above that, would open the door to the 50 percent retracement of the November move around $0.7550.
The Aussie held near 7-month peaks against the safe haven yen around 85, while its Kiwi neighbour emerged as the clear outperformer. It climbed to 82 yen, a top not seen since early January. A break above 82.34 would be this year's high. Against the US dollar, the kiwi sped up to $0.7200 , from $0.7154 early, having touched a one-month peak of $0.7212 on improving appetite for risk assets. New Zealand government bonds rose, sending yields as much as 5 basis points lower along the curve.
Australian government bond futures extended gains, with the three-year bond contract up 1 tick at 98.100. The 10-year contract rose 5.5 ticks to 97.2900 in a bullish flattening of the curve, while the 20-year contract rose 4 ticks to 96.6100. Yet prices for Australia's major resource exports, including iron ore and coal, are on a bull run thanks to demand from China. "The Aussie is more influenced by the trend in commodity prices than the pace of economic growth," said Elias Haddad, a senior strategist at Commonwealth Bank of Australia.
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