Forex - Aussie gains despite weak wage-price data, China output ahead

Investing.com - The Australian dollar gained in Asia on Wednesday despite downbeat data on wage prices and a federal budget a day earlier that showed favors austerity over stimulus.

In Australia, the first quarter wage price index rose 0.5%, weaker than the 0.6% gain seen quarter-on-quarter and the year-on-year pace dropped to a gain of 2.3%, a new record low.

AUD/USD traded at 0.7991, up 0.20%, on the data and as investors continue to assess the shakeout from tight federal budget spending proposals issued on May 12 that appear out of synch with a slowing economy and may lead the central bank to cut rates further from a record low 2%.

Earlier in Japan, data showed April bank lending rose 2.7%, slightly above the 2.7% expected and that the preliminary current account for March reached a surplus of ¥2.795 trillion yen, above the ¥2.060 trillion expected.

In bank lending, the BoJ expects a moderate uptrend in capital investment, backed by rising corporate profits.

USD/JPY traded at 119.78, down 0.07%, after the data

Also in Japan, BoJ board member Takehiro Sato is due to speak on repo market reform at the Futures Industry Association Japan conference in Tokyo at 1145 (0245 GMT).

In China, April industrial output, retail sales and fixed-asset investment data are due at 1330 local time (0530 GMT). Fixed asset investment is seen up 13.5%, industrial production gained 6.0% and retail sales are expected to gave risen 10.5% - all year-on-year.

The U.S. dollar index was quoted down 0.12% at 94.59.

The Kiwi gained in Asia on Wednesday, though off early highs, after tighter house lending rules planned for New Zealand's largest city, Auckland, as investors look to a busy data day ahead in China.

NZD/USD traded at 0.7372, up 0.16%.

The Reserve Bank of New Zealand on Wednesday announced changes to its macro-prudential policy targeting the Auckland area to deal with the increase in financial stability risks from stretched housing prices.

The RBNZ will issue a consultation paper in late May to outline these proposals in further detail and seek feedback, and plans to implement the rules beginning Oct. 1.

In the half-yearly Financial Stability Report issued Wednesday the RBNZ said the changes "involve a new restriction on loans to property investors in the Auckland region with a (loan-to-value ratio) of greater than 70% (i.e. to set a speed limit on such loans at close to zero).

Overnight, the dollar remained broadly lower against a basket of other major currencies on Tuesday, as a renewed selloff in European government bond and stock markets continued to weigh on the greenback and as trading volumes were thin with no major U.S. data to be released.

The single currency was boosted as a fresh selloff in global bond markets undermined greenback strength. German 10-year bund yields jumped, narrowing the gap with their U.S. counterparts.

German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall.

Earlier Tuesday, Greece repaid a €770 million loan installment to the International Monetary Fund, easing concerns that it was on the verge of default although fears over the country’s future in the euro area persisted.

Athens is scrambling to reach an agreement with its international creditors on a package of economic reforms in order to access fresh bailout funds and avert a liquidity crunch.