The Australian dollar broke past $1.1000 on Monday for the first time since early 1982, before taking a modest breather on news of Osama bin Laden's death. The New Zealand dollar hovered just under last week's three-year highs. The US dollar nudged higher in thin trading after al Qaeda's leader was killed on Sunday.
Still, the move was relatively modest and the Aussie eased only a little to $1.0940. It had stretched as high as $1.1011 in morning trade before profit-taking pulled it back to around $1.0950. Though the US currency could gain when New York starts trading, traders see the Aussie in a $1.0850-$1.1000 range until the Reserve Bank of Australia (RBA) announces the outcome of its May policy meeting on Tuesday.
"The Aussie has to break $1.0850-60 for a deeper pullback to 1.0770," said a trader. The Aussie has gained 6 percent in the past month, helped in part by renewed speculation of future hikes in interest rates following last week's surprisingly high inflation readings for the first quarter.
The Aussie's initial support is seen at $1.0875 and chart resistance at $1.1082. Some analysts say the runaway currency will top $1.1500 in the next two months. The kiwi followed the Aussie's coat-tails to hit $0.8104, just shy of last week's three-year high of $0.8110 before retreating to around $0.8065.
Support for the kiwi starts from just below $0.8000, with strong resistance barriers starting from the high of $0.8110 up towards the 2008 post-float high of $0.8215. The kiwi appeared to dip about 20 points after the news of Osama bin Laden's death, although the broader impact on financial markets is hard to quantify in thin trade said Derek Rankin of Rankin Treasury. The Australian dollar nudged up to a one-month highs at $1.3565, having gained 3 percent in the past two weeks.
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