Australia, NZ dollars hoard weekly gains, bump against resistance

[SYDNEY] The Australian and New Zealand dollars inched higher on Friday as data showed China's demand for commodities remained robust in March, leaving both currencies holding hefty gains for the week.

The Aussie dollar nudged ahead to US$0.7769, to be 1.3 per cent firmer for the week, though it continued to meet stiff resistance around US$0.7785.

Chinese trade data showed exports unexpectedly dipped in March but imports topped forecasts.

Figures for the first quarter, which smooth out the impact of the February Lunar New Year holidays, showed exports were still up a healthy 14 per cent on the previous year, with imports rising almost 19 per cent.

China's imports of iron ore, Australia's single biggest export earner, were steady at 271 million tonnes in the quarter thus defying speculation of a slowdown.

However, the threat of a Sino-US trade war continued to lurk in the background with the Wall Street Journal reporting the White House thought its hard-line stance was working and planned to escalate the pressure on Beijing.

President Donald Trump also sowed confusion on Syria saying the US might attack soon, or might not.

"If things do actually settle down on trade and Syria that would be a very positive sign for the Aussie dollar as it would take away a big negative in terms of worries about sentiment and growth," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

"Overall, though, we are simply ratcheting within a US$0.764/US$0.782 range."

At home, the Reserve Bank of Australia (RBA) issued its semi-annual report on the financial system and noted risks in the housing market had eased somewhat, though household debt remained too high for comfort.

The New Zealand dollar was flat at US$0.737, a touch below an eight-week high of US$0.7389 hit overnight.

The currency was poised to rise 1.7 per cent on the week, its largest gain in two months, as it weathered choppy global risk sentiment well.

"The NZD has outperformed other commodity currencies," said Jason Wong, strategist at BNZ Bank.

"Stronger risk appetite sees the NZD continuing to grind higher... the key resistance level is US$0.7440, a level it has failed to break on three occasions dating back to September."

New Zealand government bonds eased, sending yields four basis points higher at the long end of the curve.

Australian government bond futures also slipped, with the three-year bond contract off four ticks at 97.79. The 10-year contract fell five ticks to 97.275.

REUTERS