Risk-sensitive Aussie perched near multi-year highs after riding global stocks rally

SYDNEY, Feb 10 (Reuters) - The Australian dollar paused for breath on Tuesday after riding a rally in global share markets to multi-year peaks versus major peers, with analysts suggesting the upward momentum has further to run.

The Aussie AUD=D3 hung just below a three-year top of $0.7099 reached in the previous session, when it jumped 1.2%. That was a second day of solid gains, which had bulls eyeing the February 2023 top of $0.7158.

Australia's currency hovered near the 36-year peak of 110.78 yen AUDJPY=R that it scaled on Monday, after a landslide election win for Prime Minister Sanae Takaichi cemented expectations of more fiscal spending.

The Aussie edged up 0.2% to a fresh 12-1/2-year high of NZ$1.1733 AUDNZD=R on Tuesday, with a still weak New Zealand labour market leading traders to push out expectations of rate hikes in the country until late this year.

"We see 0.68–0.72 (for AUD/USD) as the emerging range, with scope for further upside — 0.75 is achievable within six months given the strong underlying drivers," said Imre Speizer, a strategist at Westpac.

"AUD/USD is up 5% since mid-January – an unusual development given the already solid base of long positioning, suggesting a long overdue adjustment towards fair value."

Data showed on Tuesday that Australia's consumer sentiment slipped in February after the Reserve Bank of Australia raised interest rates for the first time in two years. However, it was a more muted response compared with previous hikes, noted Westpac.

A monthly business survey from National Australia Bank showed activity slowed slightly in January and cost pressures eased to the lowest since 2021, while capital utilisation rates slipped from high levels.

Markets imply a 74% chance of another rate rise from the RBA in May to 4.1%. There are a total of 38 basis points of an additional tightening priced in for the remainder of this year. 0#AUDIRPR

The kiwi NZD=D3 slipped 0.2% to $0.6020, after rising 0.6% overnight to as high as $0.6059. Resistance is around a seven-month peak of $0.6092.

The Reserve Bank of New Zealand meets on February 18, which will be the first policy review for its new governor, Anna Breman. Markets are not fully pricing in a hike until October.