The Australian dollar held steady in the face of poor economic data on Thursday, but only because the market had priced in so much bad news that bond yields were already at all-time lows on expectations of steep rate cuts.
The New Zealand dollar likewise showed little initial reaction to a government budget that included a sharp downward revision to economic growth forecasts and promises of more public spending.
The Aussie kept calm at $0.6923, having spent four sessions now in a tight range of $0.6904/6941. Major support remains at the recent five-month trough of $0.6865.
The kiwi held at $0.6517, though it had slipped almost 0.5% overnight as markets globally suffered another bout of angst over Sino-US trade.
Yields on 10-year bonds traded below the 1.5% overnight cash rate this week as markets wagered the latter could slide below 1% for an extended period of time.
Australian government bond futures slipped, with the three-year bond contract off 4 ticks at 98.870.
Australia's data showed business investment fell 1.7% in the March quarter, when analysts had hoped for a rise of 0.5%, though firms did revise up their future spending plans.
The miss only added to expectations figures for gross domestic product (GDP), due next week, would also be soft.
Annual growth may well have slowed to 1.8% or less, the worst performance since the global financial crisis.
The outlook was also uncertain with approvals to build new homes falling 4.3% in April, heralding marked weakness in housing construction ahead.
The saving grace for the Aussie was that investors long anticipated the weakness and already priced in at least two cuts in interest rates this year from the Reserve Bank of Australia (RBA).
"While more downside for the Aussie is still possible, it's worth considering that from a monetary policy perspective, a lot of doom and gloom is already reflected in the price," said Marios Hadjikyriacos, an investment analyst at forex broker MX.
"Anything short of clear signals for aggressive easing from the RBA could even trigger a rebound."
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