SYDNEY/WELLINGTON: The Australian and New Zealand dollars powered to fresh four-year peaks against the yen on Monday, underpinned by a return to carry trades, while both currencies held firm versus their US counterpart.
The Aussie soared as far as 92.83 yen, its highest since September 2008, showing a gain of 2.4 percent since last week. It has risen nearly 10 percent in the past two months on expectations of much more aggressive monetary easing in Japan.
The kiwi followed suit, rallying to 73.52 yen. The currency has added 1.8 percent since January 1, while it is also up 10 percent since early November.
Broad selling of yen out of Tokyo early in Asian trading helped push the Antipodeans higher. The Antipodean currencies have lately benefited greatly from a yield play as investors borrow cheaply in yen to buy high-beta assets.
So much so, that a pull back could be in the cards.
"The yen looks oversold, and it's starting to feel heavy at these levels given the fundamentals," said Michael Turner, a strategist at RBC Capital Markets.
He said a correction to around 90 yen could easily occur should there be a risk aversion move.
Minor resistance for the Aussie was seen at 93.20 yen before 96.50, and a break above could target the psychological level of 100. It last fetched 92.24.
Against the US currency, the Australian dollar paused at $1.0487, from $1.0479 in New York on Friday. It briefly hit $1.0513 due to heavy buying in the Aussie-yen cross.
The local currency received support from further gains in key commodity prices, with spot iron ore prices now up 77 percent from their September lows at $153.3 a tonne.
The jump is a big boon to profits and incomes as the steel making mineral is Australia's single largest export earner.
The Aussie last changed hands at $1.0480, not far from a three-month peak of $1.0585 hit in December. Immediate resistance was found at $1.0527, last week's peak with traders citing stops above $1.0530.
The New Zealand dollar consolidated near $0.8300 from $0.8313 early, a 38.2 percent retracement level.
Traders said any gains above that level would limited due to offers suspected around $0.8350, also the high on Jan 3.
"Real money and local corporate demand for the kiwi on dips remains strong. This helps explain the rapid bounce-back in the kiwi from its recent lows," said BNZ strategist Mike Jones.
The Aussie and the kiwi recovered from a fall Friday after minutes from the Federal Reserve's policy meeting showed some board members wanted to slow asset purchases earlier than previously thought.
Jones said kiwi fundamentals have not changed, with a slow economic recovery continuing, commodity prices trending higher, and the global economy past the worst.
"As long as these supportive factors remain in play, kiwi dips towards $0.8000 will be short-lived in our view," he said.
The Antipodeans kept large gains on the euro, which suffered a reversal last week. The euro skidded to three-week lows of A$1.2436, well off a three-month peak of A$1.2807 touched in December.
It also lost steam against the kiwi, slipping as far as NZ$1.5691, near Dec 18 lows. It was last at NZ$1.5731.
New Zealand government bonds edged higher in price, nudging yields down around 1 basis point across the curve.
Australian government bonds were dead quiet, hovering near multi-month lows with the three-year contract unchanged at 97.160 and the 10-year contract steady at 96.580.
Center>Copyright Reuters, 2013