SYDNEY/WELLINGTON: The Australian dollar bounced back against the US dollar on Tuesday after gains in US share prices and falling volatility pointed to improving risk appetite, which helped lift the New Zealand dollar from a six-week low.
The kiwi pushed up to a session high of $0.8283 in early trade, boosted as the Dow Jones industrial average clocked another record high. The Aussie climbed to $1.0278, recovering from a slide to $1.0202.
The kiwi outperformed most major currencies and recovered from a six-week low of $0.8188 hit on Monday, when the US dollar rallied on the back of strong jobs data late last week.
The data warmed optimism about the US economy and raised risk demand. This inspired investors to book profits on the kiwi's losses late last week, which traders said had led to a squeeze on short positions.
Antipodeans gain broadly, with the Aussie climbing to 99.00 yen and nearing the 4-1/2-year highs hit on Friday.
Expectations for aggressive monetary easing in Japan contrasts with the fall in the US jobless rate, which spurred speculation that the US Federal Reserve may end its asset-buying programme earlier, even though monetary policy is expected to stay loose into 2015.
Aussie hits a 28-year high around A$1.4505 per pound as a run of dire UK data feeds speculation of yet more quantitative easing there.
Investors await Australian business confidence data amid hopes it will show a further improvement in sentiment even if activity remains lacklustre.
Aussie, kiwi will hold gains if Asian shares track US markets higher, but any significant upside may be capped by layers of technical resistance.
Support seen between $1.0205 and $1.0240, a congestion zone. Resistance lies at $1.0300, a level the Aussie has failed to break above all month, while more resistance seen at $1.0353, the 200-daily MA.
Aussie sees broad support at $1.0219, the 50 percent retracement of its slide in March-May 2012, but a break below could pave the way to bigger losses.
Kiwi sees resistance around $0.8295, where a trendline drawn connecting highs hit in the past two months falls, while offers suspected around $0.8300. Support at $0.8179, its 200-DMA.
Australian government bonds continue to slide, with the three-year contract indicated down 0.030 points at 96.995, while the 10-year contract fell the same amount to 96.415.
New Zealand government bonds largely flat in early trade.
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