SYDNEY/WELLINGTON: The Australian and New Zealand dollars scaled multi-month highs against the yen on Friday, on buoyant Asian equities and improving economic data in the United States and China, putting both currencies on track to end the week higher.
The gains for the Aussie came despite a real chance the Reserve Bank of Australia (RBA) will cut interest rates next, in part because of the very strength of the currency.
Fifteen out of 20 economists surveyed by Reuters expect the RBA to cut its cash rate 25 basis points to 3.0 percent at the Nov. 6 meeting, matching record lows reached during the global financial crisis.
The Aussie popped up as high as $1.0420, its highest since late September, from $1.0371 in late local trade on Thursday, before steadying around $1.0400.
Resistance was now seen at $1.0445, the 61.8 percent of the $1.0149-$1.0625 move, ahead of $1.0470 with key support at $1.0331 and traders citing stops above $1.0420/50.
"Easing monetary policy will help to stimulate local industries such as housing and non-residential construction, manufacturing and household consumption," said Rob Henderson, chief economist at National Australia Bank.
Financial markets are more divided with interbank futures showing a 42 percent chance of a cut next week, while swap rates imply a probability of 52 percent.
The New Zealand dollar hovered near a one-month high at $0.8267, having climbed to $0.8280 overnight, its highest since early October.
A break of key resistance around $0.8240 had propelled the kiwi higher, while data showing an ongoing rise in New Zealand commodity prices gave another boost to the currency.
Some analysts see more gains in the kiwi in the longer term, given the country's ongoing economic recovery and the view that the next change in interest rates could be a rise.
"Continued gains in soft commodity prices, the rebuilding of Christchurch and no change in Reserve Bank of New Zealand (RBNZ) policy vs. market pricing of 4 bps of cuts at its December meeting are likely to support NZD/USD," Barclays Capital said in a note.
The Antipodean currencies were underpinned by a rise in Asian stocks on the back of signs China's economy is regaining some traction. Also helping risk sentiment overnight were positive reports on US private sector employment from ADP and consumer confidence.
All eyes are now on US nonfarm payrolls due at 1230 GMT. Forecasts centre on a rise of 125,000 jobs in October while the jobless rate is expected to tick up to 7.9 percent, from 7.8 percent.
"I don't expect the reading to be as good as the ADP report... and the risk is for the Aussie to fall," said Joseph Capurso, a strategist at Commonwealth Bank of Australia, seeing the currency likely shedding a quarter cent.
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