WELLINGTON/SYDNEY: The Australian dollar popped to a 10-month peak versus a deflated euro on Wednesday, while New Zealand's currency got a respite following hefty losses against the US dollar.
The euro fell as low as A$1.4109, the lowest since November, to be last at A$1.4120.
The euro is down 2 percent this month largely due to growing expectations of another round of policy easing by the European Central Bank.
"The downtrend is fairly strong since we broke below A$1.4400 and I see another move lower of 50 to 70 ticks," said a trader at a European bank in Singapore.
Charts are bearish and a break of A$1.4043 would open the way to test A$1.3859.
The Aussie also kept near multi-month highs against the yen and pound.
The Aussie has proved resilient against a broadly stronger US dollar to be last at $0.9313, having recovered from a dip to $0.9272 on Tuesday.
It remains well within a defined band of 92-95 cents seen since March.
The gains came despite disappointing local data that showed a drop of 1.2 percent in construction work done in the second quarter, versus forecasts of a 0.3 percent decline.
The soft result added to the risk that the gross domestic product (GDP) report due on Sept. 3 might show the economy contracted in the second quarter.
The New Zealand dollar edged up to $0.8350, from $0.8331 in early trade, but was still close to a six-month low of $0.8311.
It found support after giant cooperative Fonterra reaffirmed its forecast for its farmgate milk price for the 2014/15 season at NZ$6 per kilogram of milk solids. It also said it expected global milk prices to improve later in the year after falling nearly 70 percent since the start of 2014.
Dairy is New Zealand's largest export earner.
The kiwi steadied against most major currencies, and traded around NZ$1.1165 to the Aussie, up from a near nine-month low around NZ$1.1185 hit on Tuesday. Versus a currency basket, it was at 78.73, near 78.52 hit on Tuesday, its lowest level since early March.
The kiwi has tumbled roughly 2 percent this month as markets have priced in a slower pace of monetary tightening.
Selling in large volumes seen earlier this week has stoked market speculation that the Reserve Bank of New Zealand, which has long expressed its displeasure at the currency's strength, may have indirectly sold the kiwi to accelerate its move lower.
The RBNZ does not discuss exchange rates outside of scheduled updates, but analysts say there was a possibility that the central bank may be conducting "passive" intervention.
"Some modest 'passive' intervention may be shown, and may indeed continue in coming weeks/months," BNZ analysts said in a note, suggesting the RBNZ did not want to be seen if it was intervening.
"However, we believe this will fall short of 'active' or noisy intervention, as seen in 2007, which would seem inconsistent with the RBNZ's broader monetary policy stance." Strong bids into $0.8300 were supporting the kiwi but a break would open the door to $0.8242, a low hit in February, and then the year's trough at $0.8052.
New Zealand government bonds slipped, raising yields on medium-dated bonds 2 basis points.
Australian government bond futures eased, with the three-year bond contract down 1 tick at 97.350. The 10-year contract also lost 1 tick to 96.545.
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