SYDNEY/WELLINGTON: The Australian and New Zealand currencies retreated from seven-week highs on Thursday after a disappointing report on Chinese manufacturing activity overshadowed unexpectedly strong growth numbers in New Zealand.
The kiwi at $0.7957, having earlier hit a seven-week high of $0.8017 after the country grew a startling 1.1 pct in first quarter. That was the quickest pace in five years and more than twice what analysts had predicted.
Kiwi seen supported at around $0.7955, its 200-day moving average, with $0.8020 the first hurdle higher towards a target of $0.8055.
Aussie at $1.0158, slipping from a seven-week peak of $1.0225 set overnight. Strong resistance seen in the $1.0215/25 area, ahead of the 200-day MA at $1.0250.
Both currencies had risen on Wednesday on hopes the Federal Reserve will add more stimulus into the economy.
While the Fed extended its "Operation Twist" programme, it stopped short of QE3. It also slashed its economic growth estimates and offered a glum view of the US jobs sector.
Also offering no cheer, an early reading of China's manufacturing activity by HSBC showed the factory sector contracted for an eighth straight month in June, with export orders and prices at their weakest since early 2009.
China is Australia's top export market and developments there tend to affect the Aussie.
Both Antipodean currencies also trim gains versus the yen and euro. The kiwi fetches 63.36 yen vs high of 63.69, while the Aussie buys 80.81 yen compared with 81.12 earlier.
The euro is at NZ$1.5895, off a two-month low of NZ$1.5806 plumbed earlier. It trades near a session high at A$1.2472, having earlier reached A$1.2423.
Against the kiwi, Aussie eases 0.3 percent to NZ$1.2754 after hitting a seven-week trough at NZ$1.2688.
Post the solid GDP data, markets have more than halved chances of an RBNZ rate cut in July to just 14 pct, while the outlook for next 12 months changes to 6 bps of rises from 4 bps of cuts.
Australian government bonds slip, tracking a slide in most US Treasuries after the Fed announcement. The three-year contract falls 0.09 points to 97.470, while the 10-year contract is 0.03 points lower at 96.850.
New Zealand bond prices were softer on the GDP data, driving yields up between 4 and 7 basis points.
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