SYDNEY/WELLINGTON: The Australian and New Zealand dollars surged on the yen on Wednesday as investors went hunting for yields, helping them in turn recoup a little ground on their US counterpart.
The Australian dollar edged up to $0.8687, having rallied 0.7 percent in the last session and pulling away from a four-year trough of $0.8540 hit last week.
The biggest move was against the yen, with the Aussie back above 100 yen for the first time since May last year.
It was last at 100.50, having gained 9 yen since mid-October thanks to the Bank of Japan's ultra-loose policy.
The kiwi gained more than 1.5 percent to a high of 90.50 yen , a level last seen in October 2007.
The latest blow for the yen came on growing expectations Prime Minister Shinzo Abe will postpone a planned sales tax hike to avoid damaging a fragile recovery and call a snap election to bolster his political standing.
Dealers anticipate Japanese funds will be seeking better returns abroad and Australian yields are among the highest in the rich world.
Yen weakness lifted the New Zealand dollar against a broadly softer US dollar to a high of $0.7848.
It was last at $0.7827 with near-term support seen at $0.7760, with $0.7880 likely capping the topside.
The Reserve Bank of New Zealand (RBNZ) surprised some by keeping restrictions on banks' low-deposit home lending, citing the risk that record immigration might reignite home inflation.
The bank reiterated that the New Zealand dollar was still at levels that could not be sustained nor justified, in part due to sharp fall in dairy prices and the risks of a slowdown in China.
New Zealand government bonds were trading with a hint of an offered tone, sending yields fractionally higher.
Australian government bond futures fell, with the three-year bond contract down 3 ticks to 97.380.
The 10-year contract eased half a tick to 96.650.
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