The Australian dollar bounced back on Friday after a low reading for Chinese inflation boosted hope for more policy easing there, helping offset the drag from a surprisingly weak domestic trade report. The Australian dollar was up at $1.0655, having earlier dipped to $1.0617 when Australia reported a sharp drop in trade account for January. This came on top of disappointing jobs and economic growth readings at home.
The Aussie climbed to 87.05 yen, well off this week's low of 84.75, though it is still down nearly one percent since Monday. Likewise for the kiwi which rose to 67.52 yen, from a low of 65.27 on Monday. It has lost 0.6 percent this week. The New Zealand dollar was a shade firmer around $0.8268, but still shy of the overnight high of $0.8281.
The Aussie extended losses against the kiwi at NZ$1.2881 from a two-month peak of NZ$1.3060 on Tuesday. Data showed a deficit on goods and services of A$673 million, confounding forecasts for a surplus of A$1.5 billion. Much of the miss looked to be due to the early timing of the Chinese holidays, while shipments of gold also took a steep drop. "The Aussie continues to defy gravity," said David Scutt, a trader at Arab Bank Australia.
Immediate support for the Aussie is seen around the psychologically key $1.0600 level, while resistance at around $1.0700. Against the yen, both Antipodeans advanced, underpinned by last month's easing by the Bank of Japan which made the yen the currency of choice to fund carry trades.
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