The Australian and New Zealand dollars both held handsome gains for the week on Friday as optimism on the global economy underpinned risk assets, largely at the expense of the US dollar. The Aussie stood at $0.8008, just off its recent four-month peak of $0.8023 and up 1.2 percent for the week so far. The next major targets are $0.8105 and $0.8125, tops from last September which were then the highest since mid-2015.
Sentiment remained buoyed by Thursday's blockbuster jobs report which led the market to bring forward the likely timing of a rate hike from the Reserve Bank of Australia (RBA). A rise in the 1.5 percent cash rate is now fully priced in for November, compared to December at the start of the week and February 2019 a month ago.
The New Zealand dollar held gains of 0.6 percent for the week at $0.7294, but has so far struggled to clear stiff resistance around $0.7330. Positive risk sentiment globally has underpinned the currency, though economic news domestically has been mixed at best with business sentiment taking a turn for the worse.
The next major hurdle will be consumer price inflation for the fourth quarter due on January 25. Analysts see some downside risk for inflation given food prices fell sharply in the quarter and a soft outcome would likely pressure the kiwi. New Zealand government bonds eased in line with US and European bonds, lifting yields by 3 to 4 basis points.
Australian government bond futures followed, with the three-year bond contract down 4 ticks at 97.710 and near its lowest since late 2015. The 10-year contract fell 5 ticks to 97.1350, lows last visited in October.