Australian and New Zealand dollar up

The Australian and New Zealand dollars rose to one-week highs against the yen on Tuesday with gains in the Nikkei sapping demand for the safe-haven Japanese currency. In turn, that gave the Antipodeans a bit of a bid against the US dollar, providing much-needed direction to a market looking for fresh leads after a US holiday overnight. The Aussie reached a high of 94.44 yen, continuing to recover from a two-month low of 92.99 plumbed about a week ago. It was last up 0.2 percent at 94.35.
Against the greenback, the Aussie rose 0.2 percent to $0.9257, near the upper end of a 0.9208/74 range seen in the past few sessions. It has been consolidating just above 92 US cents following a fall from above 94 cents mid-May. Key chart levels to watch are in the $0.9150 and $0.9200 region, analysts at Macquarie Bank wrote in a note to clients. The New Zealand dollar topped 87.43 yen and was sitting firmer on the greenback at $0.8566, off a four-week low of $0.8527 set on Monday.
"This area corresponds to the 200-day simple moving average and the lows from earlier in the month. If we move below this support then we should see a move to 0.9060 support and even the 0.8960 area," they said. Further gains for the kiwi depends on Wednesday's forecast dairy payout to New Zealand farmers for the 2014/15 season by global giant Fonterra, which is expected to be significantly cut from this season's record level.
The kiwi is often sensitive to price moves in the dairy industry, which accounts for close to a third of the country's export earnings. "We would not be surprised if the sticker shock is enough cause for the New Zealand dollar to test support at $0.8500," said BNZ currency strategist Raiko Shareef. Prices have fallen more than 20 percent in Fonterra's auctions over the past two months because of rising supply. Near-term support for the kiwi is seen at $0.8530, and more substantially at $0.8517, the 23.6 percent retracement of the kiwi's August-May rally, with resistance at $0.8600.
New Zealand government bonds had a slight bid tone, with yields a touch lower along the curve. In contrast, Australian bond futures eased with the three-year bond contract two ticks lower at 97.180, while the 10-year contract was down half a tick at 96.260.