WELLINGTON/SYDNEY: The New Zealand dollar bounded to its highest since 1981 on Tuesday as bulls drove it through a big buy-stop level, while its Australian neighbour lagged behind before a central bank meeting that was almost certain to leave rates unchanged.
The New Zealand dollar spiked to a new peak around $0.8332 on technical buying related to stop-loss positions, from $0.8290. It ranged $0.8277 to $0.8306 overnight.
Kiwi may look to push higher and test resistance at $0.8335, with support seen at $0.8240.
Helped by a survey showing a sharp recovery in New Zealand business confidence in Q2.
Firms are having to contain prices, but expect to gradually increase investment and hiring. Survey points to no near term risk to the central bank's on hold policy, with rate rises seen from early 2012.
The Aussie dollar resumes around $1.0735 against a late local level of $1.0714. It traded $1.0698 to $1.0766 in the overnight session. It had been knocked nearly half a cent on Monday after weak retail sales data.
Aussie has retained most of last week's 2.8 percent gain. Immediate support is seen at $1.0668, the June 30 low, with resistance near $1.0800.
Local attention turns to Reserve Bank of Australia's monthly rate review, which is expected to see the cash rate held at 4.75 percent. Attention on the statement and what the bank makes of recent softer domestic data such as retail sales.
The weak retail numbers supported the market view that rates are on hold for the rest of the year. The RBA, however, has repeatedly cautioned that rates will likely have to rise at some point to contain inflation amid a mining boom.
The Aussie eases to around 86.85 yen, but still within sight of the one-month high posted last week. But looking soft against the kiwi. It last stood around New Zealand dollar 1.2900.
Market activity was dampened by US markets being closed for the Independence Day holiday. Sentiment was weighed briefly by a warning from Standard & Poor's that some debt rollover plans for Greece would put it in selective default.
S&P's latest salvo served as a reminder to investors that the common currency's recovery would be at best rocky.
New Zealand dollar government bonds trade a touch firmer, with the yields a tick lower across the curve.
Australian bond futures mixed with the three-year contract up 0.01 points to 95.210, but the 10-year down 0.01 points to 94.760.
Copyright Reuters, 2011
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