The Australian and New Zealand dollars steadied on Wednesday amid upbeat economic news combined with rising bond yields. The recent developments have provided support for the currencies even as the U.S. dollar appreciates.

The Aussie was holding at $0.7604, recoil from a peak of $0.7664 overnight. That left the currency uncomfortably close to the recent two-month trough of $0.7564, with a possible break that could see a retreat to $0.7495/7500 or even the 200-day moving average at $0.7378. On the other hand, the kiwi stood at $0.6983, falling from a top of $0.7033 on Tuesday with support lying at the recent low of $0.6944 and the 200-day moving average at $0.6877.

China’s surprisingly upbeat activity in both manufacturing and services aided the sentiment, with the latter jumping to a very strong 56.3. China remains Australia’s single biggest export market and a major driver of prices for its key commodity exports.

Australian data also revealed a huge 21.6% increase in approvals to build new homes in February. The figures are above the forecasted 5.0%, ultimately recouping January’s entire unexpected drop. Approvals to build new houses rose by 15.1% to a record high as government grants and rapidly rising prices flowed through to more construction to support jobs and consumption.

Government finances are in far better shape than most experts feared some few months ago as the economy continues to outperform.

Analysts at CBA have estimated that the 2020/21 budget deficit could turn out at A$145 billion ($110.32 billion), representing an amazing improvement of A$55 billion on government forecasts. The underlying cash deficit for 2021/22 could also be as low as A$80 billion, with the assumptions that are no increase in government spending plans.

Hayden Dimes, an economist at ANZ, has tipped a deficit of around A$155 billion for 2021, which could lead to lower issuance.

The governments’ Office of Financial Management (AOFM) has revealed plans to sell A$230 billion of debt in 2020/21 and has already issued A$174 billion.

“If the AOFM sticks with issuance of A$230 billion there will be a significant pre-funding of next year’s deficit, which is on track to be much smaller than expected.”

The prospect of a sharp reduction in supply could help the prices of bond, which have been pressured by the latest sell-off in U.S. Treasuries. Yields on 10-year paper were up at 1.82%, having climbed 11 basis points for the week so far.

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