SYDNEY/WELLINGTON: The Australian and New Zealand dollars trimmed recent gains against their US counterpart on Tuesday but held their own versus the yen as yield-hungry investors piled into carry trades.
The Aussie edged lower to $0.9096, from $0.9106 in early trade, but was still well off a three-month low of $0.8989 plumbed last week. Support was seen around $0.9065, with dealers citing good selling interest ahead of $0.9150.
Technicals show the Aussie's downward trend was losing momentum as markets have pretty much priced in the risk of the Federal Reserve scaling back soon its bond-buying programme.
The yen stole most of the action, closing in on its lowest in five years against the US dollar. With talk of less stimulus in Europe and the United States, Japan's ultra-loose monetary policy is encouraging investors to borrow at low rates in yen to buy higher-yielding currencies.
The Aussie rose as far as 93.97 yen, having gained two yen in four sessions. A break above 94.61, the Nov 11 low, would target 95.67. The kiwi advanced most against the yen, closing in on its highest level since April.
It was last at 85.60 yen, having gained more than four yen in one month.
Data showed Australian housing finance grew 1 percent in October, exactly in line with forecast, while a measure of local business conditions improved modestly in November, according to a private survey.
The New Zealand dollar was sitting near recent highs at $0.8288, unable to hold above the $0.8300 achieved on Monday.
The currency is seen consolidating in recent ranges, with a batch of Chinese data, including retail and industrial production, later in the day looming as the main influence on risk sentiment.
"Signs of solidity in November could be sufficient to shore up improving global growth expectations and risk appetite generally. The 'risk-sensitive' New Zealand dollar would be a beneficiary," said Bank of New Zealand strategist Kimberley Martin.
Support for the kiwi remains at $0.8250 and below that $0.8220, with $0.8330 as resistance.
Local data showed a modest 0.6 percent lift in electronic card retail sales in November, while the Reserve Bank of New Zealand announced measures to water down its recently introduced limits on low-deposit loans.
The central bank said it would exempt loans for building new houses and apartments after complaints the restrictions were causing a decline in new house building.
"This exemption will help to support the supply of new housing and, in doing so, reduce some of the pressure arising from excess demand in the New Zealand housing market," deputy governor Grant Spencer said in a statement.
The change in policy was not seen affecting the RBNZ's rates thinking because loans for new-build housing make up a relatively small portion of total loans.
The RBNZ has its final rates review on Thursday, at which it is expected to leave the cash rate at its record low 2.5 percent, with most market participants anticipating the first rise will be in March. On the cross rates, the kiwi remained in the ascendancy against the Aussie, which was lingering close to a five-year low at NZ$1.0976.
New Zealand government bonds were flat.
Australian government bond futures eased a touch with the three-year bond contract down 1.5 tick at 96.875. The 10-year contract lost 2 ticks to 95.670, having touched a two-year trough on Monday.
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