SYDNEY/WELLINGTON: The Australian and New Zealand dollar held handy gains on Wednesday after a tempering in concerns about Spain's debt problems helped growth-leveraged currencies while hitting safe-havens such as the yen.
The Aussie rallied to $1.0393, from around $1.0315 in late local trade on Tuesday, so surviving another brush with important support levels.
It climbed as high as $1.0418 offshore, recovering from a slide to $1.0305 on Tuesday after minutes from the Reserve Bank of Australia confirmed the central bank may consider cutting interest rates next month.
Many in the market expect the RBA will cut rates by 25 basis points to 4.0 percent next month if data due next week shows benign inflation, which may limit gains in the near term.
The New Zealand dollar traded at $0.8213, clawing back from a slide to around $0.8150 late in the local session on Tuesday.
Solid demand at a Spanish bill auction on Tuesday quelled some concerns that the country may be forced to seek an international bailout. This raised the appeal of the euro, along with the higher-yielding Aussie and kiwi.
Data showing upbeat German investor sentiment also helped the mood, as did an upward revision to the IMF's global growth forecasts.
The biggest mover was the Canadian dollar which jumped after the Bank of Canada sounded surprisingly hawkish. That helped drag the Aussie higher on the US$, even as it fell off to C$1.0289 from C$1.358.
Increased risk demand pushed the kiwi as high as $0.8235, in offshore trade, but it pulled back following a sharp fall in dairy prices at Fonterra's fortnightly auction.
As a result, the kiwi underperformed the Aussie and other commodity linked currencies. The Australian currency traded around NZ$1.2650,rising from around NZ$1.2625 in late local trade on Tuesday.
The Aussie and the kiwi rebounded on the yen, with the Aussie back up at 84.07 from a low of 82.83 on Tuesday. The antipodeans were also supported against the euro, which fell back to A$1.2626 from a high of A$1.2718.
The Australian dollar enjoyed technical support around $1.0375, where its 200- and 21-day moving averages lay, and market participants saw the possibility of more gains if it held above those support levels.
Market participants see Tuesday's bullish sentiment to continue on Wednesday, which could push the Aussie up to around $1.0455.
Options with a strike price of $1.0400 are expected to expire later on Wednesday, and could keep the Aussie hovering around that level during the day.
More gains in the Aussie were expected to support the kiwi, although key technical resistance around $0.8260 could cap further gains. Support was seen around $1.8200, cushioned by the kiwi's 14- and 21-day averages which lay around that level.
Australian debt futures slipped a touch, with the three- year contract indicated down 0.060 point to 96.780, while the 10-year contract nudged 0.050 point lower to 96.210.
New Zealand government debt prices also slipped, pushing yields 2 basis points higher across the curve.