By Cecile Lefort
SYDNEY, June 5 (Reuters) - The Australian dollar inched ahead on Monday after firmer-than-expected business inventories and other domestic data lessened the risk of a contraction in economic growth ahead of GDP data later in the week.
Meanwhile, the New Zealand dollar hung near three-month highs in quiet trading due to a local public holiday.
The Australian dollar AUD=D4 edged up to $0.7450, from $0.7423 early and away from a trough of $0.7372 touched last week. Resistance was found at last week's high of $0.7476.
Underpinning sentiment was data showing Australian business inventories jumping 1.2 percent in the first quarter, against forecasts of 0.5 percent. That alone should add a much-needed 0.4 percentage points to economic growth. Capital's Chief Economist Shane Oliver said the outcome should lessen the risk of a contraction in GDP when the data is released on Wednesday.
While economists in a Reuters poll forecast the economy would grow a median 0.2 percent in the first quarter from the fourth, Morgan Stanley (NYSE:MS) and National Australia Bank had predicted a small contraction in the economy. ECONAU
The Reserve Bank of Australia (RBA) holds its monthly policy meeting on Tuesday but is considered almost certain to hold rates at a record low 1.5 percent, as it balances the risk of fuelling further borrowing in the country's home market against tepid inflation.
The majority of economists polled by Reuters predicted rates would be held steady until the middle of next year, while 23 out of 49 forecast a rate hike by September next year against 5 seeing an easing.
For poll results click: reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?s=GCR01+2H+7&st=Menu+G+C
The British pound extended losses to A$1.7258 GBPAUD=R following attacks in London over the weekend that killed at least seven people, having skidded 1 percent in the last session. The euro also eased to A$1.5115 EURAUD=R , away from one-year highs of A$1.5225 touched last week.
Across the Tasman sea, the New Zealand dollar NZD=D4 edged lower to $0.7130, but was still within reach of Friday's $0.7147, the highest level since early March. Resistance was found around $0.7167.
It has gained around two cents since mid-May, largely due to solid economic data at home and an upbeat outlook for dairy, New Zealand's top export earner.
The Aussie regained a little ground on the kiwi to NZ$1.0455 AUDNZD=R , having touched a four-month low of NZ$1.0375 on Friday.
Australian government bond futures rose, with the three-year bond contract YTTc1 up 2 ticks at 98.320. The 10-year contract YTCc1 gained 2.5 ticks to 97.5850, while the 20-year contract YXXc1 added 1 tick to 96.9950. (Editing by Jacqueline Wong)