A wobbly euro has fallen 5.5 pct versus the Aussie so far in July, its worst monthly performance since 1999. Last at A$1.1673 having skidded to a lifetime low of A$1.1646 overnight. Charts indicates trend is firmly lower.
The move helps the Aussie nudge higher to $1.0525 , its strongest since late March. It tripped a $1.0500 barrier, bringing immediate resistance to a daily high around $1.0555/60 with charts pointing higher.
New Zealand dollar at $0.8103, edging closer to three-month highs of $0.8109 hit on Monday. Strong support seen at $0.8083, the 61.8 pct retracement of its February-June sell-off, but offers above $0.8100 limit the upside. Kiwi on track to end the month 1 pct higher.
Speculation of further stimulus by the European Central Bank and the US Federal Reserve has given another boost to the already popular Antipodean currencies.
Aussie has been one of the main beneficiaries of foreign inflows from investors, including central banks and sovereign funds all searching for yield.
It is also one reason why Australian debt has been a stellar performer in recent months, driving yields to record lows.
Australian government bonds firm with the three-year contract adding 0.02 points to 97.480, while the 10-year contract rises 0.03 points to 97.005.
NZ government bonds also higher, prodding yields 3 basis points lower.
Opinions are divided on how commodity currencies will react post-European Central Bank rate decision on Thursday. Markets are hoping it will take fresh action to tackle the region's debt crisis.
But the ECB has repeatedly fallen short of lofty market expectations, while there is much talk the Fed will refrain from offering more monetary stimulus on Wednesday, preferring to wait until September or later.
That could trigger a sell-off in commodities, shares and the Aussie and kiwi, along with a flight to US Treasuries and the yen.
Local data showed Australian approvals to build new homes fell 2.5 pct in June vs a forecast of a larger decline of 14.2 pct. Still, total approvals are up more than 10 pct this year.
Australian private credit rose 0.3 pct, slightly under expectations of a 0.4 pct gain.