Aussie & NZ dollars power up on yen & USD

WELLINGTON/SYDNEY: The Australian and New Zealand dollars flew higher on their US counterpart and yen on Monday, as policy easing in China and prospects for Greece to clinch a second bailout buoyed risk appetite.

The New Zealand dollar jumps 1.2 pct on the day to a 5-1/2-month high of $0.8429, surging from $0.8340 in New York on Friday.

The Aussie gains 0.5 pct, leaping as far as $1.0817, from $1.0716 in New York on Friday. Last at $1.0790.

Kiwi boosted by an announcement late last week by Japan's Kokusai Asset Management that it had added New Zealand to its portfolio for the first time ever.

China's central bank on Saturday cut its reserve requirement ratio, boosting lending capacity by an estimated 350-400 billion yuan.

Traders expected resistance at $0.8450, where they suspected stop-loss orders lurked. Many in the market expected selling ahead of $0.8515, where trendline resistance drawn from highs hit in November and early February lies.

EU expected to approve a rescue package for Greece at a meeting on Monday despite scepticism over Athens' commitments to drastically cut spending.

But some analysts anticipate a drawing out of Greece's debt crisis may put the brakes on any upside in the kiwi. "More delays/disappointment on this front would rapidly undermine the 'risk-sensitive' NZD/USD," BNZ analysts said in a note.

Aussie on the rise with a trader citing the golden cross between the 50 and 200-day MA as a bullish trend.

Immediate resistance seen at $1.0825, with support at $1.0732. A break above $1.0845 open way for a re-test of last July's 30-year peak of $1.1081.

Antipodeans catapulted to levels not seen since July/August against the safe-haven yen. The Aussie climbs to 86.34, yen, having broken double top at 86.15, its highest since July. Next key resistance at 87.78, the July 11 high with a possible target of 90.04, the 2011 high.

The kiwi scales a 6-1/2-month high around 67.29 yen.

Aussie slips 0.3 pct to NZ$1.2813, more than a cent lower from last week's peak of NZ$1.2931.

Traders attributed kiwi strength versus the Aussie to brewing speculation that a run of data showing an improving New Zealand economy may prompt an interest rate rise before year end, while many expect a cut in Australian rates in the coming months.

"There's a little more discussion about the RBNZ's interest rate position, and the belief that they may be hiking sooner than many in the market had been expecting, around late December," said Alex Sinton, senior FX dealer at ANZ.

Stronger-than-expected data on New Zealand producer prices and its services sector on Monday suggested the economy is improving. While the data followed a surprisingly strong reading of retail sales last week, short-term interest rate markets are not pricing in a rate rise in 2012.

New Zealand government bonds slip, sending yields as much as 9 basis points higher at the long-end.

Australian government bond prices slip to three-month lows with three-year future contract off 0.07 points at 96.300, its lowest since Nov 7. The 10-year contract eases 0.055 points to 95.840.