Traders also pointed to strong gains in US stock index futures , which indicated a positive start for Wall Street as reflecting the improved investor mood, despite Western military action in Libya.

The Aussie rose about 0.6 percent on the day to a session high of $1.0023, well off a four-month trough below $0.9800 last week. It last stood at $1.0013.

This followed stellar gains on Friday after the G7 and the Bank of Japan decided to restrain a soaring yen with a rare and surprising concerted intervention.

"People expect more intervention and that's been seen broadly positive for risk and for the Aussie," said James Thornhill, Asia Editor, CitiFX Wire.

A break of $0.9981, the 100-day moving average, further bolstered the Aussie. Resistance was now seen at $1.0046 and support at $0.9930.

The kiwi also bounced to $0.7338 , about a third of a cent higher than opening levels.

Traders said there is a sense of relief that the intense focus on Japan is easing. "It's kind of nice, everyone is just taking a breather after the craziness of last week," said a trader at a US bank in Hong Kong.

So far, the Antipodean currencies have proved resilient to Western military strikes in Libya, but some analysts are cautious.

"For the week ahead, Middle East tensions should cast a risk averse tone over currency markets, and maintain a lid on the kiwi, with corrective bounces probably capped by 0.7350," Westpac senior markets strategist Imre Speizer said in a note.

Support for the New Zealand dollar is seen at $0.7216, its Sept 16 trough.

Both the Aussie and kiwi also extended gains on the yen. The Australian dollar climbed to a session high of 81.10 yen, well-off a 6-month trough of 74.98 yen last week, while the kiwi rose to 59.37 yen , pushing further away from last week's near one-year low of 54.98 yen.

The local dollars also broadly held Friday's gains on the euro, pound and Swiss franc. The Aussie was little changed at NZ$1.3644

In New Zealand, the focus this week is fourth quarter GDP due on Thursday, with analysts views ranging from a 0.5 percent contraction to 0.4 percent growth. Median forecast is for a 0.1 percent rise.

New Zealand government bond yields were flat to a touch higher. The country's Head of Debt Management Office told Reuters the nation would likely borrow more than expected in the current year, but finding additional lenders should not be a problem.

Australian bond futures fell with three-year contract off 0.05 points at 94.980 and 10-year contract down 0.04 points at 94.545.