Australia, NZ dollars helped higher by upbeat data, China hopes

SYDNEY: The Australian and New Zealand dollars edged higher on Thursday as domestic economic data beat expectations while news on China brightened slightly, helping both challenge chart resistance.

The Aussie firmed 0.3% to $0.6493, having been as high as $0.6522 overnight where it ran into fresh offers. It was helped by weakness in the Japanese yen which saw it touch a one-month top of 95.06 yen.

The kiwi dollar nudged up to $0.5965, after reaching as far as $0.6004 overnight, which stands as a major chart barrier.

Both were aided by a modest upside surprise in a China manufacturing survey, and by promises of more help for business and property developers from the country’s central bank.

At home, Australian data on business investment handily topped forecasts with a rise of 2.8% taking spending to its highest since late 2015.

“Business investment looks set to have been a bright spot in an otherwise challenging quarter for the economy, with consumer activity slowing under the strain of rising interest rates,” noted Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.

Data due next week is expected to show annual economic growth slowed to less than 2% in the June quarter with consumption likely shrinking in the face of high inflation and rising borrowing costs.

That slowdown is a major reason the Reserve Bank of Australia (RBA) is widely expected to keep rates steady at 4.1% at its monthly policy meeting on Sept. 5.

Markets are also wagering the entire tightening cycle might be over, with another hike priced at only a 40% chance.

The Reserve Bank of New Zealand (RBNZ) is firmly on hold, having lifted its rates to an eye-watering 5.5% over the past year.

Survey data out Thursday showed the end of hikes had helped boost business confidence to its highest level in two years in August, though the index was still negative at -3.7%.

The central bank has also been something of a headwind for the kiwi in recent months.

Balance sheet data from the RBNZ shows it sold NZ$4 billion ($2.38 billion) in July for foreign currency to boost its reserves, part of a policy announced earlier this year.