By Gyles Beckford and Cecile Lefort
SYDNEY/WELLINGTON, Jan 29 (Reuters) - The Aussie and kiwi dollars shot up near four-year peaks versus the yen on Tuesday, while bouncing elsewhere as a jump in business confidence in Australia and a surprising trade surplus underpinned both currencies.
The Aussie advanced to $1.0435, from $1.0412 early, having touched one-month lows of $1.0384 on Monday. It gained momentum on the euro with the Aussie up 0.2 percent on the day to A$1.2892, after plumbing its weakest since May at A$1.2958.
It made bigger strides against the yen and was last seen flirting with a fresh four-year peak of 95.08 yen scaled last week. It last changed hands at 94.86.
The Aussie has gained 15 percent on the yen since November with some analysts expecting the rise to continue given the Japanese government's determination to fight deflation and lower the currency.
But Matthew Johnson, a rate strategist at UBS, is not so convinced about further Aussie gains. Instead, he sees it stabilising in the 95-yen area.
It's still the highest since 2008, the year the Aussie peaked at 103.83
'It's come a long way on a promise and there are a lot of downside risks on promises, in particular with Japanese authorities,' he said.
'They have made many over the years and none of them worked.'
The catalyst for the broad Aussie move higher was a sharp bounce in Australian business confidence in December, according to a private survey, thanks in part to lower interest rates and better news offshore.
The reading gave investors an excuse to modestly pare the chances of further easing by the Reserve Bank of Australia.
Markets pricing now implies a one-in-four chance of a rate cut to a record low 2.75 percent when the central bank holds its next policy meeting on Feb. 5, from a near one-in-three chance of a cut.
The New Zealand dollar edged up from a one-month low of $0.8280 hit overnight after data showed an unexpected trade surplus for December.
The kiwi last traded around $0.8363, with support seen around $0.8315, the 50-day moving average, while $0.8393, the Jan 25 high, was seen as capping the topside.
Against the euro, the kiwi rose 0.3 percent to NZ$1.6083 , and powered up versus the yen, having gained 17 percent in three months.
'The more upbeat economic data should eventually have positive implications for the NZ dollar, all else constant,' said Westpac senior strategist Imre Speizer.
He said the longer term outlook for the kiwi was positive, looking to a return to $0.8475, the 16-month high seen in mid-December. However, he cautioned that extreme long positioning plus a dovish central bank statement on Thursday might see a dip in the kiwi.
The Reserve Bank of New Zealand is expected to stay pat on Thursday, with markets and analysts expecting no change in record low key rate at 2.5 pct. A Reuters poll sees next rate increase later this year or early next year.
New Zealand government bonds closed with an offered tone, sending yields 5 basis points higher across the board.
Australian government bonds slipped near their weakest levels since May. The three-year contract fell 0.08 points to 97.130, while the 10-year contract eased 0.09 points to 96.520.
(Australia and New Zealand bureaux) Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX
(firstname.lastname@example.org)(+6448027979)(Reuters Messaging: email@example.com)
Copyright Thomson Reuters 2013. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.