The Australian dollar held firm against its US counterpart after Australia's Prime Minister survived a second leadership challenge in as many years, leaving the policy outlook unchanged at least for the moment.
The Australian and New Zealand dollars also rose near four-year peaks on the yen on Thursday as investors awaited a press conference form the new head of the Bank of Japan (BOJ).
The dollar was steady at $US1.0378, having briefly nudged higher on a surprisingly upbeat report on manufacturing in China, Australia's biggest export market.
It remained calm after Prime Minister Julia Gillard called a ballot to meet a challenge within her own party, which she then went on to win. The government remains far behind in opinion polls ahead of an election in September.
Markets tend not to react much to political change in Australia as both main parties are seen as middle of the road on economic policy, favouring balanced budgets and fiscal rectitude.
Analysts assume the government will stay committed to fiscal tightening this year, which the Reserve Bank of Australia (RBA) has already built into its policy outlook.
For now, the market continues to price in around a 50-50 chance of one more cut in the RBA's 3 per cent cash rate, while interbank futures remained soft on the day, largely due to the Chinese data.
Resistance was found at $US1.0415, the 61.8 per cent of the $US1.0116-$US1.0599 move, with support at $US1.0350, Tuesday's low.
Markets were more focused on the first public address of new BOJ governor, Haruhiko Kuroda, later on Thursday. The central bank chief is expected to announce a more aggressive easing plan which could include buying longer term JGBs and an early start to open-ended asset buying.
The Aussie rallied to 99.69 yen, closing in on a recent peak of 99.99 hit last week and a break above would open the way to 104.5, the 2008 high. It last bought 99.50.
The yen has come under tremendous pressure in recent months on speculation the new Japanese government will take unprecedented measures to kickstart an ailing economy.
The euro trimmed recent losses against the dollar as immediate fears about a financial meltdown in Cyprus eased. Still, the common currency remained close to two-month lows touched this week.
Australian government debt futures trimmed recent hefty gains in another volatile session. The three-year bond contract was down 0.090 points at 96.950, while the 10-year contract dropped 0.065 points to 96.410.
Reuters
