The Australian dollar edged up on Wednesday as domestic data showed strong consumer confidence and a robust housing market, though investors were wary ahead of euro zone meetings over Greece that could test risk appetite. The Australian dollar rose to $0.7788, having found support around $0.7750 overnight. It touched a six-year trough of $0.7627 last week after interest rates were cut to a record low of 2.25 percent.
The Aussie firmed after local housing credit grew 2.7 percent in December, beating forecasts of 2 percent. A 6 percent jump in investment loans was unlikely to please the Reserve Bank of Australia (RBA) which has been concerned about an acceleration in speculative borrowing. "Investor activity is running a bit ahead of what the RBA would like," said Michael Turner, a strategist at RBC Capital Markets. Regulators are expected to soon implement stricter rules on certain types of lending.
Also aiding the Aussie was a survey showing consumer sentiment surged 8 percent to a 13-month peak in the wake of the RBA's latest rate cut. The New Zealand dollar was steady around $0.7424, well above a four-year low of $0.7177 hit last week. Near term support is seen at $0.7380 with resistance around $0.7450.
The kiwi has been consolidating for several days, underpinned by its relatively attractive yield. Local data showed a third consecutive monthly fall in the value of retail sales because of cheaper petrol. The kiwi was outperforming the Aussie, which was close to a three week-low at NZ$1.0479, while it was also 0.3 percent higher against the yen at 88.65 yen.
New Zealand government bonds were soft, sending yields as much as 6.5 basis points higher at the long end of the curve. Australian government bond futures extended losses, having recently touched record highs. The three-year bond contract eased 5 ticks to 98.000. The 10-year contract fell 7.5 ticks to 97.4050.
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