SYDNEY: The Australian and New Zealand dollars edged higher on Wednesday after China’s third-quarter economic growth surprised on the upside, although the two currencies are still at the mercy of rising geopolitical risks and the US interest rate outlook.
The Aussie was 0.2% higher at $0.6379, after climbing 0.7% overnight to as far as $0.6380, which was partly driven by a 0.8% surge on the kiwi dollar.
Near term resistance is at the 21-day moving average of $0.6382.
The kiwi dollar rose 0.1% to $0.5905, having fallen 0.5% overnight to as low as $0.5871 after a soft third quarter inflation report reduced the chance of a rate hike in November.
On Wednesday, data showed China’s economy grew 1.3% in the third quarter, accelerating from 0.5% in the previous quarter.
On an annual basis, gross domestic product rose 4.9% in the period, beating forecasts of a 4.4% gain.
Australia, NZ dollars edge off lows but plenty of hurdles ahead
“China’s economy is flickering back to life,” said Frederic Neumann, chief Asia economist at HSBC. “Overall, there’s still a lot of momentum coming through, putting the government’s target of around 5% within reach.”
“From a market perspective, it is quite reassuring to see better economic data, but anyone hoping for stimulus might be disappointed.”
The two Antipodean currencies are often traded as proxies for the Chinese yuan due to their economies’ exposure to China.
Michele Bullock, governor at the Reserve Bank of Australia, said on Wednesday that there were signs that inflation in the country might be difficult to suppress, and policymakers will have to raise rates again if inflation remains higher than expected.
That was in line with hawkish comments in the minutes released on Tuesday, which had sent the Aussie higher.
Australian bond yields on Wednesday tracked the renewed surge in US yields overnight, prompted by better-than-expected US retail sales numbers which led investors to price in more risk of interest rates staying higher for longer.
Three-year government bond yields jumped 9 basis points to 4.190%, the highest in three months, while the 10-years also rose 9 bps to 4.657%.
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