Beijing reported exports in December jumped 14.1 percent, from a year earlier, far outstripping forecasts of a 4 percent increase. Imports were up 6 percent, handily beating market forecasts for a 3 percent rise and quickening from zero growth in November.
The upbeat reading is good news for Australia as China is Australia's top export market as well as a key driver of prices for commodities.
"With iron ore prices at $158.50 a tonne and Chinese trade balance looking good, it's saying that things are picking up in China and that supports the Aussie dollar," said Matthew Johnson, a rate strategist at UBS.
The Australian dollar jumped around half a cent on the data to a three-week peak of $1.0554 after tripping stops above $1.0550. It last changed hands at $1.0545, showing a gain of 1 percent so far this week.
An economic recovery in China also lessens the urgency for further cuts in Australian interest rates after the Reserve Bank of Australia (RBA) eased last year by 125 basis points to a record-matching low rate of 3 percent.
Swap markets have pared back the probability of a cut at the next RBA meeting in February to a one-in-three chance from around 40 percent.
For Johnson, a quarter-point easing in February remains a possibility and sees the Aussie testing $1.0600 during the offshore session, its highest since September.
For now, immediate resistance is seen at $1.0585, the December peak, with charts suggesting further upside. Support is found at around $1.0500.
Also underpinning the Aussie is ongoing strength in prices for iron ore, a major Australian export, which hit a 15-month high this week.
Across the Tasman Sea, the New Zealand dollar broke through key resistance of $0.8400 after the strong Chinese figures and was last around $0.8398.
It hit a session high of $0.8405, near a three-week high of $0.8410 struck on Wednesday, helped by offshore real-money demand for long-dated kiwi government bonds.
Rising prices for New Zealand's top commodities also helped support the currency while investors shrugged off a wider trade deficit for the month of November and the year to November
"During the ongoing zero global yield environment, offshore investors are more than prepared to fund this widening deficit due to attractive yields that New Zealand has on offer, for little risk," said Annette Beacher, head of Asia-Pacific Research at TD Securities.
"But this cannot be relied upon indefinitely without an eventual sharp depreciation in the kiwi. This, however, may be a tale for 2014," she added.
Support for the kiwi was seen around $0.8350, while traders said stop-loss orders suspected above $0.8410 could provide near-term resistance.
The Antipodeans kept the upper hand against the yen and euro. They scaled fresh four-year peaks versus a floundering Japanese currency which has been battered by expectations that Tokyo will implement more yen-weakening monetary easing to salvage the economy.
The Aussie powered up to 93 yen, showing a 0.7 percent gain on the day, while the kiwi rose 0.3 percent in the session to 74.05 yen.
Both currencies held near one-month highs versus the euro .
Data out in Australia showed building approvals rose 2.9 percent in November, continuing a slow recovery. The series is volatile and has swung wildly in recent months, in part due the timing of some very large apartment towers.
New Zealand government bonds were firmer, nudging most yields up to 2.0 basis points lower. Yields slipped roughly 5 basis points across the curve on Wednesday, a move seen to be driven by real money demand.
Australian government bond futures slipped, getting closer to multi-month lows hit last week. The three-year bond contract eased 0.05 points to 97.170, while the 10-year contract lost 0.045 points to 96.575.
Center>Copyright Reuters, 2013