SYDNEY/WELLINGTON, June 6 (Reuters) - The Australian dollar jumped to a six-week top on Wednesday after data showed the country’s economy expanded at a faster-than-expected pace last quarter, while New Zealand’s currency held near one-month highs.
Gross domestic product (GDP) rose by 1 percent in the March quarter, from an upwardly revised 0.5 percent the previous quarter, data from the Australian Bureau of Statistics (ABS) showed.
Annual growth sprang to 3.1 percent from the December quarter’s 2.4 percent. The last time the economy ran that fast was in the second quarter of 2016.
The result just beat market forecasts for growth of 0.9 percent in the latest quarter and 2.8 percent on-year, pushing the Australian dollar to near a six-week high at $0.7665.
“The economy got off to a good start in 2018, (with) very solid bottom line growth now running above the potential for the first time since about 2016,” said Michael Blythe, chief economist at Commonwealth Bank of Australia.
“I think it fits with the idea that the next (rate) move is up but based on these numbers, we don’t seem to be generating much in the way of inflation pressures just yet,” he said. “That first move is still some way off.”
The Reserve Bank of Australia (RBA) on Tuesday held rates at a record low 1.50 percent and reiterated the need for policy to remain stimulatory as it awaits a revival in inflation.
New Zealand’s currency hovered near a one-month high despite a poor showing for prices at a fortnightly auction for dairy, the country’s main goods export earner.
The kiwi was last up 0.3 percent at $0.7045, just a touch below a one-month high of $0.7048 earlier in the week.
The currency dipped to as low as $0.6999 after the auction, held in the early hours of Wednesday morning, showed dairy prices had fallen 1.3 percent as strong supply muted buyers’ willingness to pay for key products.
New Zealand government bonds eased, sending yields 1.5 basis points higher towards the short end of the curve.
Australian government bond futures slipped, with the three-year bond contract down 3.5 ticks at 97.775. The 10-year contract was off 4 ticks at 97.23. (Additional reporting by Hideyuki Sano in TOKYO; Editing by Richard Borsuk)