The Australian dollar has inched higher after Chinese economic data either matched or beat market forecasts, suggesting policy stimulus there was making a much-needed impression.
The Aussie dollar was trading at 70.32 US cents at 1258 AEST, up from from the recent 69.10 cent low, though it faces stiff resistance around 70.50 cents.
It bounced 0.6 per cent last week as dovish comments from Federal Reserve policy makers undermined the US dollar.
Futures markets are fully priced for a quarter-point Fed rate cut come July 31, and imply around a 21 per cent chance of a half-point move.
Chinese economic growth came in as expected at an annual 6.2 per cent for the second quarter, but retail sales and industrial output both handily topped forecasts.
Sales jumped a particularly strong 9.8 per cent in June from a year earlier.
China is Australia’s largest trade market, taking around one-third of its exports, so any sign of a pick-up in demand tends to benefit the Aussie, which rose 0.3 per cent on the safe-haven yen to 75.95.
“It’s another well-flagged headline GDP outcome but encouraging strength in June monthly activity data, fitting the bullish narrative that China has been able to stoke domestic growth enough to offset the damage from the US trade war,” said Westpac currency analyst Sean Callow.
“A promising set of numbers for Australian commodity exporters.”
The kiwi dollar, meanwhile, firmed to 67.15 US cents, having rallied just over 1 per cent last week from a trough of 65.67.
Again, it faces a major chart barrier around the recent top of 67.37.
Across in New Zealand, the main domestic event of the week will be inflation figures for the June quarter on Tuesday.
Median forecasts favour a rise of 0.6 per cent in the quarter, lifting the annual pace to 1.7 per cent from 1.5 per cent and closer to the mid-point of the Reserve Bank of New Zealand’s one to three per cent target band.
Yields on two-year bonds popped higher on Monday in the wake of the Chinese data, but at 1.22 per cent are still well below the cash rate.
Australian government bond futures dipped, with the three-year bond contract off 2 ticks at 99.020.
The 10-year contract also eased 2 ticks to 98.5350.