SYDNEY (Reuters) - The New Zealand dollar jumped to a near two-month peak on Thursday after news of expectation-busting economic growth in the third quarter, while the Australian dollar was trapped in a narrow band.
The New Zealand dollar <NZD=D4> climbed as far as $0.7020, within kissing distance of $0.7034 seen last week - the highest since mid-October.
Thursday's gains came after government figures showed gross domestic product rose 0.6 percent in the three months ended September, topping forecasts of 0.5 percent.
Annual expansion was 2.7 percent, beating the 2.3 percent forecast by economists, largely driven by population growth and a construction boom.
Still, there were few signs of inflation in the report, giving the Reserve Bank of New Zealand (RBNZ) more reasons to hold the official cash rate at a record lows for a while yet.
"With growth having been much faster but CPI inflation the same, either there was more spare capacity than thought or the inflation pulse is much weaker," said Paul Dales, chief Australia and New Zealand economist at Capital Economics.
"This supports our view that low inflation will keep interest rates stuck at 1.75 percent for all 2018 and a lot of 2019 too."
For the year so far, the kiwi dollar is up about 1 percent.
The Australian dollar <AUD=D4> held at $0.7666, not too far from last week's high of 0.7694 - a level not seen since early November.
The Aussie has traded in a tight range of $0.7625-$0.7694 in the past six sessions, and looks like it will end the week barely changed after a solid 1.9 percent rise the previous week.
For the year so far the Aussie is up 6.2 percent, following annual losses in the preceding four years.
New Zealand government bonds <0#NZTSY=> eased in line with U.S. Treasuries, sending yields about 2 basis points higher at the long end of the curve.
Australian government bond futures slipped too, with the three-year bond contract <YTTc1> down half a tick at 97.84. The 10-year contract <YTCc1> fell 3 ticks to 97.3050.
