SYDNEY/WELLINGTON: The New Zealand dollar outpaced everything to touch a 20-month peak on its US counterpart on Friday, while both Antipodean currencies held at multi-decade highs against in trade-weighted terms as the yen continued to crumble. The kiwi dollar was strong at $0.8629, having pushed as far as $0.8676, its highest since August 2011. It has rallied 2.2 per cent this week, its best performance in 10 months. It's biggest problem was the sheer speed of the rise. "It needs a correction, the kiwi does need to pull back to somewhere between $0.8450 and $0.8530, if it's going to push on higher," said Westpac senior currency strategist Imre Speizer. "And then the next time it pushes on it will probably hit the record high, which could be next week." The New Zealand dollar hit a post-float high of $0.8842 in early August 2011. Kiwi strength was broad-based and led the dollar-bloc majors this week, having rallied between 1 and 2 per cent against the euro, pound, Swiss franc and Canadian dollar. Helping was upbeat retail sales, housing and manufacturing data as well as a warning by the Reserve Bank of New Zealand it may have to hike interest rates to cool an overheating housing market. Against the yen, it was up a whopping 4.3 per cent on expectations the Bank of Japan's pledge to flood the market with cheap yen will lead investors into higher-yielding assets. The kiwi last bought 85.75 yen, after jumping to a five-year high of 86.40 yen. The Aussie was also another major beneficiary, hovering near five-year peaks at 104.96. It was on track to post its largest weekly rise since June with a 3.6 per cent gain, though that has also left it overbought, having leapt 16 per cent this year. "Technically it looks overstretched but you won't see a savage correction," said David Scutt, a trader at Arab Bank Australia, seeing support from the Aussie-USD holding above key levels and dips in the USD-yen being short-lived. Against the US dollar, the Aussie kept strong at $1.0552, from $1.0544 in early trade and near a three-month high of $1.0583 hit overnight. It looked on track to show a 1.7 per cent gain for the week, the largest in nine months. Charts suggest further upside with the 5, 10- and 20-day moving averages pointing north. A break of stiff resistance $1.0600, the 2013 peak, would open the way to the September peak of $1.0625. While some traders see scope for the Aussie to test all-time highs of $1.10 set in 2011, others are more sceptical, citing the impact of the strong currency on the economy. Woodside Petroleum announced it was shelving plans for its $45 billion offshore liquefied natural gas project in Western Australia, after deciding the onshore development did not make economic sense. "It does raise a few questions marks on where the Aussie is going," said Arab Bank's Scutt. Australian government bonds edged closer to multi-month highs reached earlier in the week. The three-year contract rose 0.010 points to 97.230, while the 10-year contract added 0.020 points to 96.705. New Zealand government bonds closed with a hint of an offered tone, that saw yields 1 basis point higher at the short end of the curve. Next week, sees New Zealand's inflation report with forecasts of a 0.4 per cent rise for the quarter and a steady annual rate of 0.9 per cent, below the bottom of the target band.

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