The Australian and New Zealand dollars retreated on both the yen and US dollar on Tuesday as investors decided to book some profits on what has been one-way traffic in recent days. The Aussie shed more than two yen to as far as 86.89 yen, a sharp reversal from a two-and-a-half high of 90.04 hit on Monday. The cross was last traded at around 87.50 yen.
The across the board cut back in the carry trade followed a massive run which has seen the Aussie gain a whopping 20 percent in less than a month. The kiwi also fell to a one week low of 64.69 yen before recouping to around 65.06 yen, well below last week's 11-month high of 66.72 yen.
The Aussie skidded to around $1.0425, from $1.0490 in New York. It briefly touched a session low of $1.0390, nearly two cents lower than the 29-year peak of $1.0585 struck on Friday. A bout of consolidation was needed, traders said, to digest recent huge gains with the market very long of Aussie. Support is now seen at $1.0350 with resistance at $1.0471.
The New Zealand dollar also lost as much as one percent to a low of $0.7746, before steadying around $0.7775 in late trade. The kiwi has risen about 10 percent since hitting a low of $0.7125 in mid March as carry trades came back in vogue. The NZ dollar was briefly boosted earlier as the market took a slightly hawkish view of central bank comments, before the yen rebound erased those gains.