By Swati Pandey
SYDNEY, May 31 (Reuters) - The Australian dollar bounced off key chart support on Thursday but stayed trapped in a narrow band, while its New Zealand counterpart hovered near a three-week top as global risk appetite improved amid signs of easing political turmoil in Italy.
The Australian dollar AUD=D4 hopped above a closely-watched 20-day moving average of $0.7526 to as high as $0.7581 in early deals.
It was last down 0.2 percent at $0.7563. The Aussie has found itself in a $0.7448-$0.7606 range in the past three weeks. Analysts see critical resistance around 76 U.S. cents.
Global risk appetite got knocked earlier in the week after Italy's two anti-establishment parties scrapped plans to form a coalition. That raised the prospect of a general election, stoking fears such a vote will effectively be a referendum on the country's euro membership.
A degree of calm, however, returned, with the two anti-establishment parties renewing efforts to form a government rather than force Italy into holding elections for the second time this year. markets experienced a relief rally as fears over recent geopolitical concerns retreated," said Nick Twidale, analyst at Rakuten Securities Australia.
"Those concerns are still relevant in the market and will continue to factor in investor decisions."
Domestically, Australia released data on business investment which came in below expectations as manufacturers cut back on spending. Yet other sectors including miners splashed out more on plants and machinery in a positive sign for economic growth. mixed numbers mean the Reserve Bank of Australia (RBA) will keep rates at a record low 1.50 percent for a while yet. will keep their eyes peeled for key economic indicators next week including April retail sales, first-quarter company profits and gross domestic product.
In New Zealand, businesses downgraded their activity forecasts to a six-month low in May, weighed down by the construction sector. New Zealand dollar NZD=D4 came off its highs after the data to be last at $0.6982. The currency surged 1.3 percent overnight for its best single-day performance since mid-December to $0.6998, a level not seen since early May.
New Zealand government bonds 0#NZTSY= nudged up a bit, sending yields about half a basis point lower at the long-end and 2-3 basis points at the short-end of the curve.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 up half a tick at 97.88. The 10-year contract YTCc1 eased half a tick to 97.345. (Editing by Shri Navaratnam)