SYDNEY/WELLINGTON, July 11 (Reuters) - The New Zealand dollar took a small step back from one-year highs against the greenback and euro on Monday, having surged in the past two sessions on improved global risk appetite and diminished expectations for an interest rate cut at home.
The kiwi NZD=D4 hovered just under 73 cents, not far from Friday's peak of $0.7308 - a high not seen since May 2015. The euro was at NZ$1.5170 EURNZD=R , struggling near a trough of NZ$1.5104.
The rally started on Thursday after a speech by the Reserve Bank of New Zealand deputy governor highlighted the risks of a hot housing market and gave the impression that further rate cuts would be difficult. kiwi was given a second wind on Friday after a surge in U.S. jobs lifted demand for risk assets globally. In two short days, it had jumped 2.4 percent on the greenback. trade weighted index (TWI) =NZD came just shy of 78.00, reaching one-year highs as well. It was last at 77.68.
Yet, analysts cautioned the currency could be in for a period of consolidation.
"The USD could strengthen this week on the back of increased chances of interest rate rises," Con Williams, agri-economist at ANZ, said in a research note.
"The AUD could also improve with a government having been formed. Both may take some heat out of the elevated NZD TWI and associated crosses."
Against its Aussie peer, the kiwi retreated to NZ$1.0395 per AUD, from a 15-month peak of NZ$1.0310 AUDNZD=R .
The Australian dollar AUD=D4 dithered at $0.7562, having risen as far as $0.7574 - its best level since June 24.
A marathon election has finally concluded after Prime Minister Malcolm Turnbull declared victory on Sunday, a week after polling closed. Zealand government bonds 0#NZTSY= held firm, sending yields 1 basis point lower at the long end of the curve.
Australian government bond futures were consolidating a recent rally to record highs. The three-year contract YTTc1 edged down one tick to 98.530, pulling back from an all-time high of 98.600 set on Wednesday.
The 10-year contract YTCc1 was flat at 98.1100.