WELLINGTON/SYDNEY: The Australian and New Zealand dollars held most of their recent hefty gains on the US dollar and euro on Wednesday as investor risk appetite returned on an improved global growth outlook despite the euro zone debt crisis.
The Aussie, last at $1.0345, took a breather in Asia, having rallied more than one percent this week to a two-month summit around $1.0387.
Traders cited profit taking on the yen cross, which saw the Aussie retreat to as low as 79.13 yen from a one-month peak of 79.70. This, in turn, knocked a third of a cent off the Aussie from late New York level.
"It's been an impressive rally," said David Scutt, a trader at Arab Bank Australia.
"Today there is some gentle profit taking ... It had a four cent move over the past three weeks and is probably due for a little bit of correction," he said. Scutt envisaged a retreat to A$1.0200 at the most.
Immediate support for the Aussie is seen at around $1.0285, with key resistance at $1.0416, the 200 DMA. The Aussie has not broken the 200-day DMA since Oct 31.
Should the Aussie rise above $1.0416, it could spike to around the $1.0750 mark, which has provided heavy resistance twice in the past few months, Scutt added.
The New Zealand dollar paused at $0.7886, after climbing as far as $0.7908, its highest since Nov. 14.
The kiwi, one of the best performers overnight along with the Aussie, was seen running into technical resistance with the 100 DMA at $0.7904, ahead of $0.7933, the 38.2 percent Fibo retracement of the Aug-Nov decline.
Risk assets got off to a strong start in 2012 after a rise in the US manufacturing sector and better-than-expected PMI reading in China held out hope the global outlook may not be in as bad a shape as feared.
The euro, however, remained under pressure against the Antipodeans. It was at A$1.2597, just above an all-time trough of A$1.2560 struck on Tuesday.
It has shed more than two cents in just one week, with technicals pointing to further losses, given the break of major support in the A$1.2900/1.3000 zone.
A trader said the pair is getting closer to a A$1.2500 target.
The single currency was at NZ$1.6523, holding near a 15-week low around NZ$1.6492.
Improving risk sentiment also helped the Antipodeans hold their ground against the safe-haven Swissy, with the Aussie at 0.9652 francs, near an 11-month high of 0.9692 struck offshore. The kiwi hovered around 0.7355, just under a 3-month peak of 0.7374 francs.
The kiwi was resilient to lower milk prices at the latest auction, with prices 0.7 percent lower in a second straight auction. Dairy is New Zealand's largest export and account for about a quarter of export earnings.
NZ government bonds gained, with yields about 2 bps lower across the curve. The 10-year yield at 3.83 percent was off an all-time low of 3.76 percent struck last month.
Australian bond futures nudged higher, with the 3-year contract up 0.02 points at 96.790, while the 10-year contract added 0.05 points to 96.160.
Next focal point for markets will be debt auctions by Germany and Portugal due later on Wednesday.
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