SYDNEY/WELLINGTON: The Australian dollar gained on Thursday, underpinned by an encouraging outlook for Australian business investments, while the New Zealand dollar hovered near 2-1/2-month lows.
The Aussie rose nearly half a cent to $0.9274, before steadying at around $0.9266, having bounced off a low of $0.9210. The boost followed upbeat estimates for business investments in 2014/15, in a bullish sign for growth.
Planned spending for 2014/15 jumped to A$137 billion, from an earlier estimate of A$125 billion.
"Overall, it's a very good number," said Joseph Capurso, a strategist at Commonwealth Bank of Australia. "And the detail is even better. It means the Australian economy looks like it is transitioning from mining to non-mining investments" he said, seeing the Aussie close to 93 cents for the rest of the week.
The data, however, showed there was a small downside risk to the gross domestic product reading due out next week because of a fall in new capital expenditure in the first quarter.
Strong support is seen around $0.9210, with resistance at $0.9278.
The Australian dollar rose across the board, particularly versus the kiwi. There were notable moves in the bond markets as a global bond rally sent Australian 10-year government yield below 3.64 percent, the lowest since August.
Australian debt futures also powered up with the three-year bond contract up 4 ticks to 97.230 and.
The 10-year contract leapt 7 ticks to 96.370, leading to the flattening of the curve. It touched a 10-month peak of 96.385.
New Zealand government bonds had a solid bid tone, with yields as much as 4.5 basis points lower. In contrast to the Aussie, the New Zealand dollar was nursing heavy losses at $0.8475.
It shed 0.8 percent on Wednesday and was seen facing further weakness.
"The kiwi broke through strong long-standing support yesterday and is in an even more bearish mindset than before, I'm calling it down to $0.8400 and it may be closer to $0.8300 by the time the sell off is done," said Westpac senior strategist Imre Speizer, who sees the decline occurring over the next few weeks.
The kiwi gave ground on the cross rates, sliding to multi-month lows against the Aussie and yen .
The trade-weighted kiwi skidded to 79.21, its lowest since mid-March.
The catalyst for the decline was a sharp fall in business confidence to a seven-month low, and while businesses are still solidly optimistic, the data refreshed concerns the Reserve Bank of New Zealand will slow its rate-tightening plans.
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