SYDNEY: The Australian and New Zealand dollars extended their meteoric rise on the yen on Monday as dismal Japanese economic data only served to reinforce the case for aggressive stimulus in the country, including from a weaker currency.
The Aussie shot to a 20-month peak of 102.40 at one stage before steadying at 101.90, a rise of three yen in just five sessions.
The kiwi reached its loftiest level since August 2007 around 92.79 yen.
The latest burst of selling followed news Japan had skidded back into recession last quarter as the economy shrank by 0.4 percent from the second quarter, confounding forecasts of a 0.5 percent increase.
The unwelcome data set the stage for Prime Minister Shinzo Abe to delay an unpopular sales tax hike and to call a snap election just two years after he took office. It also justified the Bank of Japan's decision last month to expand its already massive asset-buying campaign and fuelled expectations that Japanese investors would seek higher yields abroad.
The Aussie also held firm on the US dollar at $0.8778 , aided by news the Australian government was set to sign a free trade deal with China which would open the Asian giant's markets to many more of its exports.
The kiwi got a lift from data showing retail sales in New Zealand jumped a hefty 1.5 percent in inflation adjusted terms last quarter, well above forecasts and a sizable boost to economic growth.
That helped the currency to a two-week high of $0.7959 and well above a recent trough of $0.7660.
The strong data knocked New Zealand government bond prices lower, sending yields as much as 4 basis points higher.
Australian government bond futures rallied, with the three-year bond contract up 4 ticks at 97.430. The 10-year contract climbed 8.5 ticks to 96.730.
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