Recasts, adds kiwi high, analyst comment on move in yen

By Stella Qiu

SYDNEY, May 6 (Reuters) - The Australian dollar notched a new four-year peak on Wednesday and the kiwi a two-month top as global stocks rallied on a mixture of AI euphoria and hopes a deal to resolve the Middle East conflict could be reached soon.

The improvement in risk sentiment undermined the U.S. dollar, as did rumours Japanese authorities (MoF) had intervened again to sell dollars for yen as they did last week.

That helped lift the Aussie 0.9% to $0.7249 AUD=D3, breaking resistance at $0.7228 and reaching ground last trod in June 2022. Bulls are now eyeing the next major barrier at $0.7283, with support solid at 71 cents.

The New Zealand dollar rallied 1.1% to $0.5951 NZD=D3, clearing a former top at $0.5929. The next targets are $0.5964 and $0.6012, with support around $0.5858.

Talk of Japanese intervention hit the U.S. dollar hardest, but also erased the Aussie's early gains on the yen and left it down 0.4% at 112.97 yen AUDJPY=.

"It seems as if the MoF have been back into the JPY," said Michael Brown, a senior strategist at Pepperstone.

"I remain of the view that 'yentervention’ is a speed bump in the ongoing trend, as opposed to something that can change that trend on its own," he added. "However, it is also a factor that makes short JPY positions akin to picking up pennies in front of a steamroller."

The Aussie was still benefiting from Tuesday's rate hike from the Reserve Bank of Australia, which lifted the cash rate to well above its peers at 4.35%. 0#AUDIRPR

Markets generally assume policy makers will now sit on their hands for a couple of months to watch how events unfold in the Middle East.

Yet analysts at National Australia Bank surprised by calling for another rate rise in June, arguing that the cash rate was still not restrictive enough.

"A terminal cash rate of 4.6% would see the real cash rate around 1% by year end, and close to 1.5% by the middle of 2027," they wrote in a note.

"These are elevated levels for the real cash relative to historical experience and we think would reflect restrictive monetary policy."

Over in New Zealand, some mixed data on the labour market did little to change the market view on rates. Swaps imply a 34% probability of a hike in May, while a move in July is fully priced.