The Australian dollar hopped to a one-month high on Wednesday as domestic growth numbers beat investors' worst fears, forcing a round of short-covering among bears.The New Zealand dollar was up near three-month peaks underpinned by US dollar weakness and a strong auction result for the country's main goods export earner, dairy. The Aussie firmed to $0.7540, from $0.7500, after government data showed the economy grew 0.3 percent in the first quarter and 1.7 percent for the year.
While a modest outcome it confounded speculation the economy might have contracted last quarter. New Zealand's kiwi got as far as $0.7026, the highest since late February, before fading to $0.7184 as the GDP data boosted the Aussie at the expense of its neighbour. The Australian dollar rose to NZ$1.0492, from NZ$1.0433. The kiwi had earlier got a lift when global dairy prices rose for the sixth auction in a row. New Zealand government bonds gained, sending yields 3 basis points lower at the long end of the curve.
Australian government bond futures dipped, with the three-year bond contract off 6 ticks at 98.260. The 10-year contract held steady at 98.6000. "The market was positioned for a weaker number, so the result lifted the Australian dollar," said Tapas Strickland, an economist at NAB. "So overall, it is a soft number but not as soft as some had expected and there is less pressure on the Reserve Bank to ease."
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