The Australian dollar staged a relief rally on Wednesday after data showed the economy did not contract by as much as some had feared, while the kiwi took a breather following a series of post-float highs.
The Aussie dollar jumped nearly one percent on the day to a session high of $1.0751, not far off a three-week peak of $1.0757 set on Tuesday, after data showed Australia's gross domestic product (GDP) contracted 1.2 percent in the March quarter.
While this is still the biggest quarterly drop in 20 years, markets had been bracing for a far worse number following Tuesday's shocking report showing net exports subtracted a record 2.4 percentage points from Q1 growth.
The Aussie climbed nearly one percent on the kiwi in a major turnaround, as investors booked profits. The kiwi has gained nearly 5 percent in just a fortnight, taking the Aussie to a four-month trough of NZ$1.2905 on Tuesday.
The New Zealand dollar was knocked off its perch and briefly dipped below $0.8200 from $0.8246 offshore before steadying at around $0.8219 in late local trade.
The critical level for the kiwi, which touched a 26-year high of $0.8264 on Tuesday, was seen around $0.8270, the June 1982 peak, ahead of the psychological barrier at $0.8300.