By Mantik Kusjanto and Cecile Lefort
WELLINGTON/ SYDNEY, Feb 13 (Reuters) - The Australian dollar rallied sharply from four-month lows on Wednesday aided by some upbeat domestic data and strength in domestic shares and global commodity prices.
Yet the Antipodean currencies trimmed gains on the yen after a G7 official voiced concerns about excessive movements in Japan's currency.
The Aussie rallied to $1.0355, rebounding from $1.0227 touched overnight, its lowest since mid-October.
'Positioning was the main driver,' said a trader at a European bank in Singapore. Many in the market had been short of the Aussie given it had been slipping for more than two weeks.
Traders said short positions taken below $1.0240 were then forced to cover, while a solid performance in stocks and commodities such as iron ore and coal helped along the way.
See graphic: http://link.reuters.com/zyv94t
Also helping was a 2.5 percent surge in shares of the Commonwealth Bank of Australia to an all-time high of A$67.38, after posting record first half earnings of A$3.7 billion.
The same trader pointed to a sharp improvement in Australian consumer confidence to its strongest in 26 months, which amplified the Aussie bounce.
Yet, some dealers said the Aussie remained vulnerable after earlier this month the Reserve Bank of Australia (RBA) left the door wide open for further easing if the economy needed it.
Interbank markets are still pricing a one-in-three chance of a rate cut to a record low of 2.75 percent in March, while swap markets imply at least one more cut this year.
Moving average studies also suggest more losses for the Aussie with key resistance at $1.0370, the 38.2 percent of the $1.0227-$1.0599 move and major support at the October double bottom of $1.0150.
Across the Tasman sea, the New Zealand dollar regained further ground at $0.8416, from this week's low of $0.8311.
It got a lift after Finance Minister Bill English said New Zealand could not afford to intervene in the financial markets to lower its currency.
'We have been pretty clear we are not willing to take the kind of huge risks involved in large scale speculation on the exchange rate with tax payers' dollar,' English said.
'We'll be out in the war zone with a peashooter.'
He said countries like Switzerland had taken on big risks to manage its currency by building up huge positions on exchange rates.
Immediate support for the kiwi remained at $0.8370 with resistance at $0.8440, ahead of a 19-month high of $0.8492 struck earlier this month.
The Antipodeans pulled back from recent four-year peaks against the yen with the Aussie changing hands at 96.17 yen from a high of 96.87 yen on Tuesday.
It still remained near a peak of 97.42 hit last week, its highest since August 2008.
The kiwi also retreated to 78.116 yen, but was still in sight of last week's four-year high of 79.41.
The yen managed to regain some lost ground following a flurry of, often conflicting, statements from the G7 about excessive yen moves.
Australian government bond futures eased, with the three-year contract 0.07 points lower at 97.150 and the 10-year contract 0.050 points lower at 96.520.
New Zealand government bonds were lower, with yields nudging up four basis points across the curve.
(Australia and New Zealand bureaux) Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX
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