The Australian dollar has held steady in the face of poor economic data but only because the market had priced in so much bad news that bond yields were already at all-time lows on expectations of steep rate cuts.
The Aussie was little-changed at 69.23 US cents, having spent four sessions in a tight range of 69.04-69.41 US cents.
ABS data released on Thursday showed business investment fell 1.7 per cent in the March quarter, when analysts had hoped for a rise of 0.5 per cent, though firms did revise up their future spending plans.
The miss added to expectations that figures for gross domestic product (GDP), due next week, would also be soft.
Annual growth may well have slowed to 1.8 per cent or less, the worst performance since the global financial crisis.
The saving grace for the currency was that investors long anticipated the weakness and already priced in at least two cuts in interest rates this year from the Reserve Bank of Australia.
Yields on 10-year bonds traded below the 1.5 per cent overnight cash rate this week as markets wagered that interest rates could slide below one per cent for an extended period of time.
“While more downside for the Aussie is still possible, it’s worth considering that from a monetary policy perspective, a lot of doom and gloom is already reflected in the price,” said Marios Hadjikyriacos, an investment analyst at forex broker MX.
“Anything short of clear signals for aggressive easing from the RBA could even trigger a rebound.”
Australian government bond futures slipped, with the three-year bond contract off 4 ticks at 98.870.