Australia, NZ dollars seesaw on greenback, keep climbing on yen

By Wayne Cole

SYDNEY, Jan 14 (Reuters) - The Australian and New Zealand dollars steadied on Wednesday after their U.S. peer enjoyed a broad bounce overnight, while both currencies extended gains on the yen as expectations built for more debt-funded fiscal stimulus in Japan.

The Aussie was holding at $0.6687 AUD=D3, having retreated from a top of $0.6727 overnight. Major support is seen at $0.6662, with resistance at the recent 15-month high of $0.6766.

"The recent run-up in the Aussie is supported by all manner of fundamental drivers, including RBA rate expectations, yuan appreciation, positive risk sentiment and higher commodity prices," said Ray Attrill, head of FX strategy at NAB.

"We currently have no reason to revise our forecasts for AUD/USD at $0.69 by end Q1 and $0.70 around mid-year and remaining above in the latter half of 2026."

The kiwi dollar was flat at $0.5740 NZD=D3 after also falling back from a $0.5784 top overnight. Support lies at $0.5712, with resistance at $0.5810.

Both fared better versus the ailing yen as the Aussie climbed to its highest point since July 2024 at 106.59 AUDJPY=D3, having risen for five straight months.

The latest media reports said Japanese Prime Minister Sanae Takaichi is considering calling a snap lower house election on February 8, hoping to expand her party's slim majority.

Australian economic data failed to move the needle on rate expectations with job vacancies dipping a slight 0.2% in the November quarter, pointing to stability in labour demand.

Markets imply a 27% chance that the Reserve Bank of Australia will raise the 3.6% cash rate by a quarter point when it meets on February 3, though that rises to 76% by May. 0#AUDIRPR

Much will depend on consumer price data for the fourth quarter which is due at the end of this month, where an increase of 0.9% or more in core inflation would greatly increase the pressure for a near-term increase.

In New Zealand, recent data has pointed to a continued pickup in activity from subdued levels, though nothing that would require a rise in rates.

Markets imply almost no chance of a rise in the 2.25% cash rate at the Reserve Bank of New Zealand's next meeting on February 18, with little prospect of a move until at least September. 0#NZDIRPR