WELLINGTON/SYDNEY: The Australian and New Zealand dollars rose anew on the yen helped by Japanese retail buying, while the US dollar was weighed by the looming risk of a US government shutdown.
The Australian dollar lunged to a fresh 29-year peak at $1.0535, and could even tackle $1.1000 thanks to the massive momentum built up in the past three weeks.
"It's a very favourable backdrop," said John Horner, a strategist at Deutsche Bank. "We've got a very accommodative Fed policy, a weak US dollar and strong commodity prices."
The Aussie also stretched its legs to 89.61 yen, a level not seen since September 2008. It was briefly knocked back to 88.06 overnight after a new quake rocked Japan, but it rapidly rebounded as it became clear the quake did little new damage.
Traders said the correction served to squeeze out weak longs and set the stage for a sustained run above 90.00.
The New Zealand dollar also climbed to 66.57 yen, inches away from this week's 11-month high of 66.72.
The yen downtrend remained intact as markets expect the Bank of Japan to maintain an ultra-loose monetary policy to help the economy recover from last month's massive earthquake.
This means the Japanese currency will remain the currency of choice to fund purchases of higher-yielding assets.
The Antipodeans have been stellar performers against the yen since mid-March, with the kiwi up 20 percent, closely followed by Aussie up 19 percent.
They also brushed aside the looming risk of a US government shutdown, scaling new peaks.
Horner said he doesn't see any obvious catalyst on the calendar for the currency to turn around in the near-term. The Aussie gained 8 percent since mid-March.
Traders quoted $1.1082 as an important Elliott Wave target. Support is now seen at $1.0453.
The Aussie rally also dragged the kiwi up, breaking a two-month high of $0.7835 while flirting with a November 2010 summit of $0.7837, defying a grim domestic picture.
"Looking ahead, positive momentum, lofty global commodity prices, and upbeat global risk sentiment all have the potential to carry the kiwi a bit higher in the near-term," BNZ currency strategist Mike Jones said in a note to clients.
However a sustained break above $0.79 would probably need an improving domestic picture, and in the absence of that, the kiwi is likely to drift lower over the next few months, Jones said.
It later edged back to $0.7816, up nearly 10 percent since mid-March. Support is seen at $0.7760 with resistance at $0.7837.
As the kiwi underperforms its neighbour, the Aussie recovers to NZ$1.3456 from a near two-month low of NZ$1.3335 on Thursday. The pair struck a 19-year high of NZ$1.3794 on March 7.
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