SYDNEY: The Australian and New Zealand dollars were little moved by better-than-expected China economic data on Tuesday as traders, who have priced in China reopening surprises, looked past backward-looking figures.
The Aussie was hovering at $0.6974 on Monday, after briefly breaking above 70 cents for the first time since August in the previous session. It now faces resistance at yesterday’s top of $0.7019.
The kiwi dollar was standing at $0.6406, a touch below yesterday’s peak of $0.6426, as gains evaporated overnight amid a stall in global stock markets.
The two currencies, which had benefited by China’s rapid reopening from COVID lockdowns since December, took in stride better-than-expected fourth quarter economic data from China.
The world’s second largest economy expanded at 2.9% in the fourth quarter from a year earlier, beating market expectations of a 1.8% gain. For the whole of 2022, growth stood at 3%.
Barrenjoey chief macro strategist Damien Boey said the data did not corroborate what had been suggested by underwhelming leading indicators such as the Purchasing Managers’ Index and lending data.
Aussie breaks past 70 cents for first time since August
“And the other side is that …. the market is kind of due for a bit of a pause or a breather, it needs to get real confirmation and then some of the recoveries (happening) in order to solidify that,” he said.
“Even if they’re really positive, a lot of the positivity has already gone into the asset prices that are exposed to China.”
Domestically, a survey by Westpac-Melbourne Institute released on Tuesday showed Australia’s consumer mood brightened for the second month in a row in January, as a break in a painful cycle of interest rate rises likely provided temporary relief for borrowers.
However, the local market also favours a quarter-point hike from the Reserve Bank of Australia (RBA) to 3.35% in February, with some chance it may pause for the first meeting since May.
Yields on Australian government bonds remained steady, although not far away from one-month lows hit last week.
The yield on 10-year bonds stood at 3.611%, and the yield on three-year notes sat at 3.195%.