Australia dollar index bumps up against 28-yr highs

SYDNEY/WELLINGTON, March 27 (Reuters) - The Australian dollar matched 28-year highs against a basket of major currencies on Wednesday, challenging a huge chart barrier as upbeat U.S. data bolstered the outlook for global growth while Cyprus' bailout scheme hung heavy over the euro.

* The Aussie's trade weighted index climbed to 79.3, matching a peak from March last year and up over 3 percent just this month. A push higher from here would take it to territory not seen since February 1985.

* This level has frustrated rallies on repeated occasions since mid-2011 so a break would be very bullish from a technical perspective.

* The rise reflects in part a stable outlook for Australian rates while other majors are either maintaining super easy policies or, like Japan, planning to ease even further.

* Europe's financial troubles have also highlighted the relative safety of Australia's triple-A rated debt, a point underlined by the Reserve Bank of Australia (RBA) on Wednesday.

* In its semi-annual financial review, the RBA gave a clean bill of health to the banking system and found households were well placed to meet their debt obligations .

* All of which helped the Aussie hold firm on its U.S. counterpart at $1.0480 , not far from a two-month high of $1.0497 struck overnight. Dealers report a thicket of option barriers up to $1.0530 which could hold it back for now.

* NZ dollar follows, rising to a one-month high of $0.8396 before steadying around $0.8390.

* Kiwi sentiment positive after Fonterra increased its payout forecast to farmers as expected on the back of rising dairy prices in recent auctions. But it also pointed to worsening dry conditions.

* Aussie also back up on the yen at 99.03 amid reports the Bank of Japan will likely adopt a new bond buying target, perhaps as soon as next week.

* Wall Street up, with benchmark S&P 500 index extending to just below its all-time closing high set in Oct 2007, after U.S. housing and manufacturing data add to evidence of an improving economy.

* Euro struggles near a four-month low vs the U.S. dollar, with sentiment hurt by Cyprus' bailout scheme that could set a precedent for other troubled euro zone economies.

* That also weighs on the single currency against the Antipodeans. Euro sinks to A$1.2258 , after touching the lowest since November last year at A$1.2225.

* Against the kiwi, the euro slid to a seven-month low of NZ$1.5306 , having shed two cents in as many days.

* Australian government bonds higher as the Cyprus mess benefits safe-haven debt. The three-year contract gained

0.040 points to 97.000, while the 10-year contract also rose to 0.040 points to 96.450.

* NZ government bonds also firmer, nudging yields down 4 to 5 basis points across the curve.

(Australia and New Zealand bureaux)

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Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX