The Australian and New Zealand dollars jumped against the safe haven Japanese yen on Tuesday, as risk appetite was whetted by yet another sign of rapprochement between the United States and China.

The US Treasury Department on Monday dropped its designation of China as a currency manipulator days before top officials of the world's two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war.

The widely expected decision sent equities soaring while safe harbour assets slipped.

Against the Japanese yen, the risk sensitive Australian dollar rose for a fourth straight session to a near two-week high.

The New Zealand dollar was up for a third straight session to the highest since Jan. 2.

Moves against the greenback were muted. The Aussie was down 0.1% at $0.6894 after a dull session on Monday. Its kiwi cousin was flat at $0.6628.

As safe havens fell out of favour, investors dumped bonds.

New Zealand government bonds eased, sending yields about 5 basis points higher at the long end of the curve.

Australian government bond futures slipped, with the three-year bond contract off 1.5 ticks at 99.195. The 10-year contract fell 4.5 ticks to 98.73.

"Risk appetite was broadly supportive overnight with the AUD/JPY seeing sustained strength," ANZ economists wrote in a note.

"Outlook for the AUD is balanced today with USD factor to be key."

The dollar hit an eight-month high of 109.95 yen in US trade on Monday and last stood at 109.93. The Japanese currency has weakened about 1.3% so far this year.