SYDNEY, May 5 Reuters The Australian and New Zealand dollars regained some altitude on Wednesday as surprising strength in local economic data suggested the United States was not the only country where upward pressure on interest rates was mounting.
The Aussie edged up to 0.7734, after touching a threeweek low of 0.7675 overnight when the U.S. dollar got a broad lift from talk of future U.S. rate hikes.
The kiwi dollar firmed to 0.7173 and away from a trough of 0.7116, which now marks major chart support.
It was helped by data showing New Zealands unemployment rate unexpectedly dipped to 4.7 in the March quarter, when analysts had thought it would stay at 4.9.
Todays report was a great read, and confirms the strength of the Kiwi economy, said Jarrod Kerr, chief economist at Kiwibank. The economic scarring from Covid lockdowns is far less than anyone had predicted six months ago.
Kerr doubted this alone would shift the Reserve Bank of New Zealand RBNZ from its dovish policy outlook, but the economy was clearly performing better than it had forecast.
The tighter the labour market, the more pressure on wage growth. And wage inflation is not as easily dismissed by the Reserve Bank as inflation generated by temporary supply disruptions, he added.
Investors responded by lifting 10year bonds yields to 1.74, the highest since midApril.
In Australia, the surprise came in approvals to build new homes which blew away forecasts with a rise of 17.4 in March, confirming a…