WELLINGTON/SYDNEY: The Australian dollar hit two-week highs against the greenback on Wednesday, while its New Zealand counterpart also gained ground thanks to buoyant risk appetite after Moody's maintained its investment grade rating on Spain.
Traders said there was some relief that Spain was not downgraded to junk status and optimism was growing that Madrid is moving closer to addressing its debt woes.
That saw the euro rise against the dollar, which in turn helped lift the Antipodean currencies. Stock markets across Asia were also firmer, reflecting the improved risk appetite.
"That's usually good for the Aussie and kiwi as well," said Joseph Capurso, a strategist at Commonwealth Bank.
The Aussie dollar rose as far as $1.0324 -- a high not seen since Oct 2 -- before relinquishing a bit of ground to last stand at $1.0307, up roughly 0.1 percent on the day.
Immediate resistance is seen around $1.0325/30, a level that had previously provided good support. But a break there could see the Aussie retest the Oct. 2 high of $1.0376.
Against the New Zealand dollar, the Aussie was steady at NZ$1.2600, taking a breather after reaching a three-week peak of NZ$1.2648 overnight.
The kiwi rose 0.1 percent on the greenback to $0.8174 , recovering from a five-week low of $0.8110 plumbed on Tuesday, when soft inflation data fuelled speculation of a more dovish Reserve Bank of NZ statement from the new governor Graeme Wheeler next week.
"We've seen a very strong bounce in the euro and the Aussie today, which is dragging the kiwi higher against the US dollar," said Tim Kelleher, head of institutional FX sales at ASB Bank, adding that the sell-off in the kiwi the previous day had been overdone.
The currency was also bolstered by a return to higher dairy prices in Fonterra's latest auction, with the average price up 1.8 percent after a slight fall two weeks ago.
Traders said the New Zealand unit was supported by demand below $0.8150, while sellers lurked around $0.8225-$0.8250.
The near-term outlook for the Antipodean currencies hinges on a slew of Chinese data due on Thursday including third-quarter gross domestic product and September industrial production. China is a major export market for both Australia and New Zealand.
Investors gave safe-haven government debt a wide berth and that saw New Zealand government bonds fall, pushing yields as much as 7.5 basis points higher at the long-end of the curve.
Australian government bond futures were lower as well, with the three-year contract down 0.08 points at 97.560, and the 10-year contract 0.10 points lower at 96.970.
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