The Australian dollar edged towards one-month highs on Tuesday after upbeat data on exports and government spending bolstered views the country's economy rebounded smartly in the second quarter. The Australian dollar was hovering around $0.7960, up from Monday's $0.7943 and within sight of $0.7997 touched last week, the highest since August 1.
It dipped briefly when the Reserve Bank of Australia (RBA) left interest rates at a record low of 1.50 percent, as expected, and again cautioned that a further rise in the currency would hinder economic growth. The New Zealand dollar was a shade firmer at $0.7177, from $0.7141 the previous day. The Kiwi was still near three-month lows after falling 4.5 percent in August amid jitters over the country's hotly contested election.
New Zealand government bonds eased, sending yields 1 basis points higher at the long end of the curve. Australian government bond futures slipped in the wake of the strong domestic data, with the three-year bond contract down 5 ticks to 97.980. The 10-year contract fell 4 ticks to 97.3400.
However, the RBA also noted that recent data supported its forecasts for a gradual pick-up in growth this year. Australia's net exports added 0.3 percentage points to GDP growth last quarter, when most analysts had expected a small subtraction, official figures showed on Tuesday. Other data showed government spending was surprisingly upbeat in the quarter, tilting the risks to the upside for the gross domestic product (GDP) report due on Wednesday.
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