The Australian and New Zealand dollars struggled near two-week lows against the greenback on Wednesday but surged to four-month peaks against the euro as it took a severe beating from Italy's political turmoil. The Australian dollar held at 1.5383 per euro from Tuesday's 1.5307, a level not seen since late January.
The New Zealand dollar was last at 1.6688 per euro, within striking distance of Tuesday's high of 1.6649. The euro has suffered badly in recent days as investors dread the prospect of an election rerun in Italy returning a populist and eurosceptic government. Elsewhere, the Aussie slipped 0.2 percent to $0.7492 against the US dollar as the greenback strengthened broadly.
The kiwi dollar was last up 0.1 percent at $0.6910, above the day's low of $0.6883. New Zealand government bonds prices rose, sending yields down about 2 basis points at the long end. Australian government bond futures gained, with the three-year bond contract up 3.5 ticks at 97.890. The 10-year contract added 5.5 ticks to 97.365.
Sources close to some of Italy's main parties said there was now a chance that President Sergio Mattarella could dissolve parliament in coming days and send Italians back to the polls as early as July 29. Analysts said a bigger issue was whether the election would clash with the European Central Bank's (ECB) agenda to wind down its massive quantitative easing programme.