The Australian and New Zealand dollars were heading for hefty weekly gains on Friday after a bounce in oil prices and expectations of further policy easing in some parts of the world sharpened appetites for risky assets. The Australian dollar held at $0.6996, having jumped a cent on Thursday. That was a marked turnaround from a 7-year trough of $0.6828 and left the currency on track for the biggest weekly gain since October with an increase of 2 percent. Resistance was found at $0.7050.
Dealers said investors were forced to unwind bearish Aussie positions after oil prices bounced off 12-year lows. Helping risk sentiment were comments from the European Central Bank hinting pointedly at more policy easing as early as March. The surprise remarks sent the euro sharply lower.
The yen also took a knock on a media report that the Bank of Japan was taking a serious look at expanding its stimulatory measures, perhaps at a meeting next week. All of which helped the Aussie regain some ground against the euro and yen with weekly gains seen in excess of 2 percent. The euro dropped 0.4 percent to A$1.5471, having touched a peak of A$1.6072 last week. Against the yen, the Aussie rose to 82.37, up 2.4 percent for the week. The New Zealand dollar was a major beneficiary of improving risk appetite. It held at $0.6521, from a 4-month trough of $0.6348 set on Wednesday.
The Kiwi has gained 0.9 percent this week against the dollar, and around 1.5 percent against the yen and euro. New Zealand government bonds were slightly firmer with yields down between half and 1.5 ticks. Australian government bond futures eased, with the three-year bond contract off 4 ticks at 98.060. The 10-year contract fell 3 ticks to 97.2800, while the 20-year contract lost 3.5 ticks to 96.7800.