SYDNEY/WELLINGTON: The Australian and New Zealand dollars climbed on Tuesday in the wake of better-than-expected Chinese data, but worries about the health of the US economy and Europe's sovereign debt problems kept markets cautious of commodity currencies.
The Aussie dollar climbs a third of a cent to a session high of $1.0440, after HSBC's China Flash PMI rises to 49.8 from 49.3, higher than initially feared by the market.
Aussie tends to be very sensitive to news from Beijing, its key export partner.
Aussie last at $1.0428 vs $1.0413 in New York. Local currency has showed resilience in the past week despite large moves in equities. The Aussie gained more than 2 pct since diving to a 5-month trough of $0.9927 earlier this month.
But traders cite downside risk with charts suggesting the rally from $1.0315 to $1.0482 was corrective. The currency is set to head towards $1.0115 after a period of consolidation in the $1.0310-$1.0490 range, according to one trader.
Focus is now on a speech by Reserve Bank of Australia (RBA) Deputy Governor Battellino at 0400 GMT.
Markets keen to hear any monetary policy hint from the RBA following recent market turmoil. Interbank futures pricing in 58 bps worth of rate cuts by October and an easing of at least 100 bps by year-end.
The NZ dollar also rises to $0.8252 post China-data, up from $0.8243 in late NY trade. But it could struggle to push higher with $0.8300 the next resistance. IMM data show speculators trimming net long positions in the kiwi.
Markets slowly pricing out rate hike risk as domestic inflationary pressure overtaken by uncertain global outlook. Risk of a rate hike on Sept. 15 only put at 16 pct while pricing over the next 12-month slashed to 42 bps from as high as 101 bps three weeks ago.
Still, markets are waiting for a survey done for the central bank, including inflation expectations, due around 0300 GMT. A spike in the June survey raised bets for a rate hike.
The Aussie off a 5-week peak of NZ$1.2734 against the kiwi. Last trades at NZ$1.2636 .
NZ data calendar this week includes July overseas trade, food inflation and second quarter retail -- poll sees 0.6 percent rise in volumes.
The NZ government debt a touch softer after US Treasuries fell as equities rebounded.
Australian bond futures also slightly weaker, with the 3-year contract 0.04 points lower at 96.360 and the 10-year down 0.04 points at 95.690.
Copyright Reuters, 2011
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