SYDNEY: The Australian and New Zealand dollars were idling near 5-1/2 month highs on Tuesday as their recent winning streak ran into resistance, while mixed readings on China’s factory activity kept sentiment fragile.

The Aussie was little changed at $0.6812, after a hefty 7.6% gain in the past two months helped the currency hold steady for the year.

It faces resistance at $0.6871, the highest since mid-July, which was hit on Friday.

The kiwi started the year 0.2% lower at $0.6304, having ended 2023 with a small loss of 0.5%. Major resistance is at $0.6370.

A private survey on Monday showed China’s manufacturing activity expanded at a faster-than-expected pace in December, a result that contrasted with an official survey on Sunday showing the sector contracted.

Raymond Yeung, chief China economist at ANZ, said the surveys showed the risk of deflation has heightened in the world’s second-largest economy.

“It would require a strong dose of fiscal and monetary stimulus in 2024 to break the negative spiral,” added Yeung. China is Australia’s single biggest export market and a setter of prices for many of its commodities, notably iron ore.

Australia, NZ dollars keep climbing as markets go all-in on rate cuts

Down Under, data showed Australia’s house prices rebounded 8% last year, but interest rate hikes and worsening affordability have somewhat slowed the pace of growth through the final months of the year.

Markets still are wagering the Reserve Bank of Australia is done tightening monetary policy, and the next move is a cut, fully priced for June next year.

Likewise, even though the Reserve Bank of New Zealand (RBNZ) has sounded decidedly hawkish recently, markets are fully priced for four rate cuts next year as the economy sputters under the rate hikes.