The Aussie rose to $1.0480, from $1.0454 in late local trade on Tuesday, very near the November high of $1.0491. A break above could see a test of $1.0520, the September 21 peak. The kiwi dollar held up around $0.8250 in late trade, having touched a near one-week high of $0.8261 offshore ahead of the Reserve Bank of New Zealand's (RBNZ) rate decision on Thursday. Interbank futures suggest a 50-50 chance of a follow-up rate cut in February, when the central bank next meets, and have priced in rates at 2.5 percent for the middle of next year.
The Australian dollar has showed remarkable resilience this week, having gained 0.5 percent since Monday. "Speculative short investors are getting tired of trying to move the Aussie lower and are at the point of giving up," said David Scutt, a trader at Arab Bank, seeing the Aussie climb above $1.0500 later in the session.
He said a break above long-term trendline of $1.0565 would be very bullish and could see a test of $1.1000, the post-float high. "If it breaks that level, it's definitely on the cards," he said, adding this time of the year usually sees an equity market rally as volumes get very light.