SYDNEY/WELLINGTON: The Australian dollar received a fillip on Thursday from upbeat data in Australia and China, while the New Zealand dollar still nursed losses following a threat of intervention by the Reserve Bank of New Zealand.
The Aussie rose half a cent to $0.9374, though it faces tough resistance at $0.9400, the 76.4 percent retracement of the April-May fall.
It was pulling closer to this year's peak of $0.9461, having gained 5 percent since Jan. 1. The move higher came after China's trade numbers beat expectations, with exports rising 0.9 percent on the year in April.
Imports from Australia grew almost 18 percent in April from a year earlier.
The Aussie had already received a leg up on a solid labour report at home. Australian jobs growth outpaced expectations for a third month running in April and helped keep the jobless rate from rising.
The outcome will be welcomed by the Reserve Bank of Australia, which again kept rates on hold this week in expectation that past cuts were working to reenergise the economy.
The futures market dipped a touch as it had already priced out any chance of another easing, while swap markets slightly increased the chance that the next move in rates would be up, albeit not until 2015.
"The market is probably a little too complacent on how long they expect the cash rate to remain unchanged. They don't have a full hike priced until September of next year," said Su-Lin Ong, an economist at RBC Capital Markets.
The Aussie rallied across the board and showed the largest increase against its kiwi neighbour. It jumped 0.5 percent to NZ$1.0821, well above a one-month low of NZ$1.0642 touched on Tuesday. Against the US dollar, the New Zealand dollar was stuck at $0.8654. Investors dumped the currency on Wednesday when the Reserve Bank of New Zealand warned that a historically strong currency could slow the pace of future interest rate rises.
In a speech, RBNZ Graeme Wheeler had also put the possibility of kiwi-selling intervention on the table if economic fundamentals no longer justify currency strength. His comments pushed the kiwi down 0.9 percent, its biggest daily fall since late January.
Broad selling knocked the kiwi down to its lowest in roughly a week against the euro.
As a result, the kiwi fell to 80.08 versus a currency basket, retreating from 81.00 on Wednesday, when it matched a post-float high.
Most economists still expect the RBNZ to raise rates to 3.25 percent in June, but analysts said that risks were growing that the central bank may then pause its tightening cycle if the kiwi stays strong.
"It's nice to see some domestic factors emerging in the kiwi pricing, but the ultimate driver is going to be the US dollar," ANZ currency strategist Sam Tuck said.
"We'd expect to see decent demand below $0.8600."
New Zealand government bonds rose, pushing yields 3 basis points lower at the long end of the curve.
Australian government bond futures retreated from multimonth highs, with the three-year bond contract down 3 ticks at 97.120. The 10-year contract was steady at 95.880, having touched a seven-month high of 96.190.
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