By Wayne Cole
SYDNEY, Oct 11 (Reuters) - The Australian dollar edged higher on Wednesday after an upbeat consumer confidence reading boosted hopes for a rebound in consumption, while its New Zealand counterpart edged away from four-month lows.
The Aussie dollar AUD=D4 gained 0.3 percent to $0.7801, putting a little distance between last week's trough of $0.7733.
Chart resistance was seen around $0.7808, with a much more important barrier at $0.7875.
Sentiment was aided by Westpac's latest survey of consumers which found a welcome rebound in confidence after a run of subdued months. main index climbed 3.6 percent in October to reach 101.4, meaning optimists outnumbered pessimists for the first time since November last year. That went some way to offsetting a shock fall in August retail sales reported last week.
Kristina Clifton, a senior economist at CBA, noted the survey found worries about job security had declined to their lowest level since mid-2001, with confidence particularly high in the building sector.
"Residential construction is still elevated and non-residential construction and infrastructure spending are lifting which is supporting this industry," said Clifton.
"We expect decent jobs growth to continue in the months ahead which should see job security fears continue to drop."
The improved numbers reinforced market expectations the next move in interest rates would be upward, albeit not for some time yet. A hike in the 1.5 percent cash rate 0#YIB: is not fully priced in until October next year.
Still, local bond yields seemed attractive enough to investors at home and abroad. A new issue of A$3.5 billion in government 2022 bonds sold on Wednesday was well subscribed, drawing bids worth A$12.9 billion.
Australian 10-year bonds AU10YT=RR pay 2.84 percent, a premium of 48 basis points over comparable U.S. debt.
The New Zealand dollar NZD=D4 added 0.4 percent to $0.7094, though that remained uncomfortably close to its recent trough at $0.7052.
Investors continue to wait to see who exactly will end up running the country in the wake of an inconclusive election.
A small party that holds the balance of power is holding a fourth day of talks aimed at forming a government, having delayed a decision on which party it would back. Zealand government bonds 0#NZTSY= picked up a safe-haven bid, pushing yields down 3 basis points across the curve.
Australian government bond futures were a shade softer, with the three-year bond contract YTTc1 off 1 tick at 97.830. The 10-year contract YTCc1 eased half a tick to 97.1350.