The New Zealand and Australian dollars' risk-inspired rally ran out of puff on Wednesday amid profit taking and some caution about how much progress will be made in resolving the eurozone's debt woes. The high flying kiwi eased late in the session to around $0.8530, after it had outperformed other major currencies in the offshore session to hit a 30-year high of $0.8573.
Investors booked some of the kiwi's recent spectacular gains, which has seen it leap from a low of $0.8110 in a week to levels last seen in mid-1981, and with analysts suggesting the trend is higher. The kiwi even seemed immune to a fall in prices at dairy giant Fonterra's latest auction, which wiped out all the gains for this year. Dairy is the country's biggest export earner and often an influence on the currency.
The kiwi is seen supported at the previous high of $0.8507 and below that $0.8464, with $0.8600 the first hurdle. ANZ strategists said technical factors point to a trend high of $0.8749. The kiwi has gained 9.5 percent so far this year. The Aussie held firm at $1.0721, having hit a week high of $1.0751 on a commodity rally sparked by progress in US debt talks, strong US earnings and better-than-expected housing data.
A wall of option barriers at $1.0750 knocked the Aussie back to where it started on the day. Profit-taking on the Aussie-kiwi brought the Australian dollar back from the doldrums to NZ$1.2550, having hit an 11-month low of NZ$1.2471 earlier this week.