SYDNEY: The Australian and New Zealand dollars paused to digest recent meaty gains on Thursday as a US holiday thinned liquidity, though the prospect of a vaccine-led global recovery kept commodity prices and risk assets well underpinned.

The Aussie held at $0.7369, having risen 4.9% for November so far to reach a three-month top of $0.7373. Bulls were now preparing for a test of the September peak at $0.7413, a break of which would take it to ground not trod since August 2018.

The kiwi dollar was enjoying the view at $0.7006 having already reached its highest since June 2018. The next major target is $0.7060, though the currency is vulnerable to profit taking given it has surged almost 6% so far this month.

That jump was driven partly by weakness in the safe-haven US dollar but also by surprising strength in the domestic economy and a boom in house prices which led the market to scale back expectations of further policy easing.

The country's government added fuel to the fire this week by asking the Reserve Bank of New Zealand (RBNZ) to consider the need to contain house prices when setting rates (OCR).

The swaps market is now pricing in only 10 basis points of easing by late next year, compared to more than 25 basis points a month ago.

Yields on 10-year bonds dipped from a four-month top on Thursday, but at 0.925% are still up 34 basis points for November. As a result the spread to US Treasuries has swung from -33 basis points to +11 basis points, making the kiwi materially more attractive as a carry trade.

In contrast, Australian 10-year yields have risen only 10 basis points this month to 0.93%, which saw the Aussie skid to a seven-month low on the kiwi of NZ$1.0469 at one stage.

Australian 10-year futures were a tick firmer at 99.0850 on Thursday, but well off their October peak of 99.2900.

"That might make the RBNZ less gung-ho about lowering interest rates in the near term," Dominick Stephens, Westpac chief economist for New Zealand.