Australia dollar jumps to 2-month highs on China data, kiwi tumbles

Strong Chinese data released on Wednesday pushed the Aussie past crucial chart hurdles, jumping to two-month highs.

The Chinese data defied expectations after analysts predicted a slowdown to 6.3%.

Australian dollar price

The Australian dollar jumped above 72 US cents to $0.7026, its highest level seen since February 22, after data figures showed China’s economy grew at 6.4% in the March quarter.

AUD/USD has already had an up and down week, hitting a low of $0.7140 on Tuesday after the RBA minutes were released with a dovish tone. Traders wagered on a greater chance of a interest rate cut this year.

China's industrial output also grew at the fastest pace since July 2014 with factories ramping up output in anticipation of more business.

The solid data from China has boosted prospects that the country is starting to stabilise, amid fears of a global slowdown.

New Zealand dollar price

Meanwhile, The New Zealand dollar tumbled to a 3-1/2 month trough after lukewarm inflation. At last close the kiwi was at $0.6731 after going as low as $0.6668 following weak data that showed inflation had slowed by more than expected in the first quarter. The inflation had slowed more than the central bank had forecast.

Markets recated to the weak data betting that the Reserve Bank of New Zealand (RBNZ) would cut rates from already-record lows of 1.75%, where they have been since late 2016.

Overnight the market was pricing in a 65% chance of a rate cut in May, up from 30 % before the CPI release.
The lukewarm inflation saw New Zealand government bonds with yields down about 6-7 basis points in the short-end of the curve.

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