The Australian dollar came back to parity at around $1.0022, helped by a stronger euro and buying from local exporters and real money funds.
The Aussie received a double knock on Tuesday, when it was first hit by global risk aversion following tensions in the Middle East, then by a powerful earthquake in New Zealand which dragged the currency to a low of $0.9966.
"Today was a bit of a relief rally with people taking some of the profits and allowing the currency to rise again," said Roland Randall, strategist at TD Securities in Singapore.
The Australian dollar, which shed one percent against the US currency on Tuesday, also lost nearly two yen before edging back up to around 82.68 yen on Wednesday.
Against its neighbour, the Aussie jumped to a two-month high of NZ$1.3435, reflecting the contrasting fortunes of their respective economies.
The New Zealand dollar steadied at around $0.7474, having earlier hit a 2-month low of $0.7433. It shed over 2 percent on Tuesday following the quake.
Investors wagered the blow to the economy and consumer confidence meant the Reserve Bank of New Zealand (RBNZ) was now unlikely to lift rates at all this year, and might even ease.
Markets are pricing a 56 pct chance of a 25 bps rate-cut in March and have just 10 bps worth of rate hikes priced in over the next 12 months.
"Whether you look at it from a yield differential or from a fundamental broad perspective, there doesn't seem to be that many reasons to buy the kiwi at the moment," said Randall at TD Securities.
Randall added the country was probably in a "technical" recession.
At home, Australian wages rose 1 percent in the fourth quarter of 2010, just above forecasts, while the value of construction work done gained 0.8 percent.
Reserve Bank of Australia Governor Glenn Stevens reiterated his upbeat views on the nation's trading boom, saying it could last a lot longer than in the past thanks to China and India's massive appetite for commodities.
The nation's terms of trade are already 65 pct above average level of 20th century, auguring well for the economy as through profits, jobs, wages, investment and tax receipts.
Australian bond futures gained, with the three-year contract up 0.01 points at 94.860, while the 10-year contract gained 0.03 points to 94.430.