* US$ lifted by rising yields, steeper curve
* Euro in retreat, focus on 200-day moving average
* Kiwi hit by soft GDP, Canadian dlr beats all-comers
SYDNEY, Dec 23 (Reuters) - The U.S. dollar notched a two-month top on the yen in Asia on Wednesday, with buyers enticed by U.S. yields at four-month highs and the steepest yield curve on record.
The dollar was holding firm at 91.81 yen, from 91.79 late in New York and 90.30 at the end of last week. It stretched as high as 91.86 at one point, a rally of over 8 percent from the low of 84.81 suffered in late November.
Traders said sell orders from Japanese exporters were thought to be around 92.00 yen, but with Tokyo markets off on holiday they may have been moved higher.
The euro was on the defensive at $1.4250, having sunk as low as $1.4216 on Tuesday after a third credit downgrade of Greece, though Moody's noted a debt crisis there was still a distant prospect.
Traders were eyeing the 200-day moving average at $1.4194, a break of which could see it retreat to the $1.4000/1.4044 area.
And the New Zealand dollar slid to a three-month low of $0.6974 after data showed the economy grew a meagre 0.2 percent in the third quarter, disappointing market hopes for something stronger.
In contrast, the U.S. dollar had been aided by a sharp 7.4 percent jump in existing home sales, which supported the market's recent optimism on the economic outlook.
That pushed 10-year Treasury yields up to 3.76 percent, a four-month high and a rise of 28 basis points in just three days.
It also led to a further steepening in the yield curve, with the gap between two- and 10-year yields out at a record 285 basis points. Dealers said such a spread was very tempting to investors who could borrow short-term and lend long.
"The attractive "risk-free" return on the steep yield curve is compelling U.S. investors to repatriate some of their huge offshore investments to take advantage of it," said John Noonan, a currency analyst at IFR.
"USD/JPY was particularly supported by the rise in U.S. yields as Japanese yields are expected to stay very low, as the BOJ continues to battle deflationary pressures." The Bank of Japan (BOJ) has sounded noticeably more dovish in recent days, saying it would not tolerate deflation or inflation at zero.
KING CAD
Another currency benefiting from rising yields was the Canadian dollar, which has actually outpaced its U.S. neighbour to be the best performing major currency this month.
Canadian 10-year yields have risen 40 basis points in the past month to hit a five-month high of 3.60 percent.
David Watt, a senior currency strategist at RBC Capital Markets, noted the C$ had performed particularly strongly against the euro and sterling. So far this month, the single currency has fallen 5 percent on the Canadian dollar to $1.5063.
"It's not as though CAD's performance is unjustified," he argued. "Global equity markets have remained firm; oil prices are again over US$74; base metals prices continue to rise steadily, and Canada's economy continues to give every sign of a solid Q4 performance."
Canadian Finance Minister Jim Flaherty acknowledged as much in an interview with Reuters, saying the outlook for next year was good and there was little they could do to restrain the Canadian currency. (Reporting by Wayne Cole; Editing by Jonathan Standing)