Aussie dollar loiters near multi-month peaks on USD & yen

WELLINGTON/SYDNEY: The Australian and New Zealand dollars were holding hefty gains against the US dollar and yen on Wednesday, having raced to multi-month peaks overnight, energised by attractive yields and hopes Greece will eventually agree to a debt deal.

The Aussie pauses at $1.0788, from $1.0803, having reached a six-month peak of $1.0823 overnight. It jumped one percent on Tuesday after the Reserve Bank of Australia surprised by holding rates steady at 4.25 pct, when the market had been wagering a cut of 25 basis points.

Support for the Aussie initially at yesterday's daily low of $1.0765 with resistance at $1.0867, the August 2011 high. Market targeting the 30-year peak of $1.1081.

New Zealand dollar firm at $0.8348, little changed on the day but hovering near a five-month high of $0.8380 hit late last week.

Traders say the currency's upside capped by light offers around $0.8360, more selling expected above $0.8380.

Long kiwi positions seen overstretched as the currency has rallied unstopped for over five weeks now, keeping intact the possibility of a downward correction. But in the current risk-on climate, currency expected to remain bid.

A broadly stronger euro bounces off all-time lows on Antipodean currencies. The single currency trades at NZ$ 1.5868, off record trough of NZ$1.5627 hit earlier this week.

It was last at A$1.2278 against the Aussie, off low of A$1.2124 with charts showing strong positive signals for the EUR/AUD suggested by hammer on daily candles. Initial resistance seen at A$1.2300, the intersection of the 10-day MA and Tenkan line.

South Pacific pair hold near multi-month peaks against the yen with the Aussie at 82.93 yen, a touch below an overnight peak of 83.19, its highest since late October when Japan last intervened.

The kiwi last stood t 64.20, having touched a three-and-a-half month peak at 64.31 yen on Wednesday.

Aussie/kiwi steady at NZ$1.2917, pulling back from a one-week high around NZ$1.2961 hit on Wednesday after the RBA rate decision.

Traders see strong support around NZ$1.2905/10, the 20-day moving average and the 38.2 percent Fibonacci retracement of its August-December rally.

NZ employment numbers due on Thursday with expectations that around 8,000 jobs were added in the fourth quarter, with the jobless rate edging lower to 6.5 percent from 6.6 percent.

New Zealand government bonds lose further ground as safe-haven demand dissipates, sending yields around 10 basis points higher along the curve.

Australian bond futures extend losses with the three-year contract down 0.02 points to 96.510, the lowest since mid-November. The 10-year contract eases 0.015 points to 96.000.