The Australian dollar soared to a more than three-month peak on Friday and was set for its best weekly performance since mid-March, supported by a survey showing solid manufacturing growth in top trading partner China. A gauge of manufacturing activity in the world's second biggest economy expanded to 51.7 in June, the eleventh straight month of gains and the fastest pace since March.
That confounded forecasts of a drop to 51.0 in a Reuters survey. The Australian dollar, typically used as a liquid proxy for China plays, scaled a high of $0.7712 - a level last seen on March 21. For the week, the Aussie is up nearly 1.9 percent. It notched up gains of 3.66 percent for the month, following losses in March, April and May. Across the Tasman Sea, the New Zealand dollar stood at $0.7317, within kissing distance of a near five-month top of $0.7344 touched earlier this week.
The Kiwi is set for its seventh consecutive weekly gain. For the month it is up 3.3 percent, notching up its second straight win. New Zealand government bonds fell again, sending yields jumping as much as 9.5 basis points on the long-end of the curve. Australian government bond futures slid, with the three-year bond contract down 6 ticks at a three-month trough of 98.020. The 10-year contract sank 7.5 ticks to a 1-1/2 month low of 97.375. "The Australian dollar has moved a little bit faster than we had expected, but we see the Aussie has more upside risks than downside.