SYDNEY/WELLINGTON: The Australian and New Zealand dollars extended losses against a vivacious euro on Monday but advanced on the yen and dollar even as data showed another run of soft Australian data.
The euro soared to A$1.2709, the highest since Jan 2 and around four cents above Thursday's trough. It easily broke through chart resistance A$1.2535, the 61.8 percent retracement of the fall from A$1.2810 to A$1.2350 and looked set to test the October peak of A$1.2824.
Likewise, the euro climbed a two-week peak of NZ$1.5976, showing a gain of 3 percent in three sessions.
The single currency has been on a tear since European Central Bank chief Mario Draghi last week gave no indication the bank would ease monetary policy any further.
Immediate resistance for the Aussie was found at A$1.2725 with hourly support at A$1.2645.
Yet a rally in Asian bourses underpinned the Antipodeans elsewhere, with the Aussie rising to $1.0553, from $1.0535 early, and near Friday's four-month peak of $1.0598.
The Aussie has showed a remarkable resilience to a flow of weak domestic data including a fall in housing finance and another slide in job ads.
Last week, figures showed soft retail sales and a widening trade deficit.
Supporting the local currency is ongoing strength in commodity prices and an improving Chinese economy, Australia's top export market. Prices for iron ore, a major Australian earner, hit a 15-month high last week.
Still, with inflation remaining at bay, markets are pricing a one-in-three chance of a quarter point rate cut in February when the Reserve Bank of Australia (RBA) holds its monthly meeting and are fully priced for one more easing in 2013.
"We see at least two more cuts this year. The Aussie will stay high at $1.0500-$1.0600 which will keep pressure on the RBA to do it," said Martin Whetton, a dollar bloc interest rate strategist at Nomura.
The central bank eased by a total of 125 basis points to 3 percent last year, in part to offset the negative impact of the high currency and a decline in the country's terms of trade.
Earlier on Monday, a private gauge of Australian inflation showed price pressures remained benign in December, suggesting there was still scope for further easing.
Investors were now awaiting a speech by Federal Reserve Chairman Ben Bernanke due later in the session. Any signs the Fed is in no hurry to end its quantitative easing programme could see the dollar soften.
Major Aussie resistance was found at $1.0600 with support at $1.0502, the 38.2 percent of the $1.0345/$1.0599 move.
The kiwi rose 0.3 percent on the day to a session high of $0.8396, approaching a four-week peak of $0.8462 on Friday.
Market participants see support for the kiwi around $0.8350 as the currency remains bolstered by demand from real money investors, which has been seen since the start of the year.
Both Aussie & kiwi dollars rose against the yen as the bank of Japan remained under intense pressure to reflate the Japanese economy.
The Aussie climbed to a four-year peak of 94.54 yen, while the kiwi lunged to 75.25 yen, also close to a four-year high around 75.40.
NZ government bonds edged up, nudging yields as much as 3 basis points lower at the short end of the curve.
Australian government bond futures recovered from near multi-month lows with the three-year contract up 0.02 points to 97.160. The 10-year contract added 0.01 points to 96.560.
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