SYDNEY/WELLINGTON: The Australian dollar climbed to fresh 29-year highs against a broadly softer greenback on Wednesday, lifted by a rally against the yen as investors jumped back into carry trades after a mild shake-out of long positions at the start of the week. A rebound in Asian stocks and gains in commodity prices, which saw gold hit a record high above $1,500 an ounce, all helped underpin demand for the Aussie. It flew to a high of $1.0599 and was last at $1.0580, well up from $1.0516 late in New York on Tuesday. A breach of the previous peak at $1.0585 spurred stop-loss buying, although option barriers around $1.06 appeared to be capping the currency for now. Dealers said the barrier could be taken out when trading in Europe gets underway, a move that would drive it towards resistance seen at $1.0616 and then $1.07. "At the moment, we're seeing less volume and higher volatility with most traders looking to wind down for the Easter long weekend break," said Kara Ordway, strategist at City Index Australia. "The 1.06 mark will be significant for many traders as many are speculating large amounts of barrier options at this level." Against the yen, the Aussie climbed about one percent on the day to 87.82 . Since March 17, after a rare G7 intervention to curb runaway yen gains, the Aussie has gained some 17 percent against the Japanese currency and 9 percent on the greenback. Investors have been using both the yen and dollar to fund purchases of higher-yielding assets and currencies like the Australian dollar, courtesy of the U.S. Federal Reserve and Bank of Japan ultra-loose monetary policies. In contrast, the Reserve Bank of Australia remains on a tightening path thanks to a mining investment boom. It has hiked rates by 175 basis points since October 2009, making it the most hawkish central bank in the developed world. Data on Wednesday showed Australian export prices rebounded last quarter, lifting the terms of trade to near historic heights and fuelling the mining boom. The U.S. dollar was pressured by a revival in the euro and by a higher fix for the Chinese yuan, which encouraged speculation Beijing was ready to let its currency rise faster to curb inflation. KIWI The Aussie was little changed against its New Zealand counterpart at NZ$1.3344 , having already rebounded strongly from a two-month trough of NZ$1.3178 plumbed on Monday. Tracking the Aussie, the kiwi came close to reaching a two-year peak near $0.80 set on Monday. It rose as high as $0.7957, before easing back slightly to $0.7927. Support for the kiwi was seen at $0.7864, with first hurdle at $0.7965, ahead of a renewed assault of the $0.80 level. The kiwi was also supported by the latest auction of global dairy giant Fonterra, where prices inched higher after falling in the previous two sales. Against the yen, the kiwi gained 0.9 percent to 65.70 , not far from an 11-month peak of 66.72 set earlier in the month. New Zealand government debt prices fell, with yields rising around 6 basis points ahead of NZ$1 billion worth of supply this week. The benchmark 10-year yield rose to 5.78 percent, the highest since early January, from 5.689 percent on Tuesday. "It's a fairly large issue. More longer-dated issues are coming to the market and pushing yields higher," said Daniel Brdanovic, chief manager Treasury at HSBC in Auckland. The Debt Management Office has said last week it would increase its borrowing by NZ$1.5 billion for the fiscal year to June 30 to NZ$16.5 billion, the second rise in two weeks because of strong investor demand. Australian bond futures also dipped, with the three-year contract off 0.05 points at 94.870 and the 10-year contract down 0.035 points at 94.460.

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