The Australian and New Zealand dollars regained some ground on Wednesday after better-than-expected Chinese trade helped assuage, at least for now, concerns about the world's second largest economy. The Australian dollar was squeezed 0.6 percent higher to $0.7027, pulling away from the four-month low of $0.6927 touched on Monday. It rallied around 1 percent against the safe-haven yen and Swiss franc.
Most of the gains came after China reported a decline of 1.4 percent in December exports against an expected drop of 8 percent. Imports fell by 7.6 percent versus forecasts of 11.5 percent. Particularly encouraging was a 17.2 percent rise in imports of iron ore, Australia's top export earner. The Antipodean currencies were already firmer following heavy intervention by Chinese authorities to stem the yuan's fall and stabilise its currency.
Resistance was found at the session's peak of $0.7049. The Aussie is still down nearly 4 percent so far this year with investors worried that China could be losing its grip on managing the slowdown of its economy. The New Zealand dollar rallied 0.5 percent to $0.6564 after the China trade data, but was still near an 8-week trough of $0.6509 set on Monday. New Zealand government bonds gained, sending yields 2.5 basis points lower along the curve. Australian government bond futures were mixed, with the three-year bond contract reversing earlier gains to be down 2 ticks at 97.9900. The 10-year contract was steady at 97.2150, while the 20-year contract added 3 ticks to 96.7600.
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