The Australian and New Zealand dollars hit five-month highs on Tuesday, looking to end a lacklustre year on a brighter note as the stars align for a stronger world economy in 2020. The Aussie stood at $0.7005, almost back to where it began the year. That left it down 0.6% for 2019, a solid outcome given at one point it hit a decade low of $0.6670.

The technical outlook was also promising after a recent break of the 200-day moving average - currently at $0.6900 - the first sustained breach since early 2018. The next major hurdles are a retracement target at $0.7056 and a high from July around $0.7082.

The kiwi dollar has performed even better to be a fraction firmer on the year at $0.6734, a marked turnaround from a $0.6204 trough touched in October. Its 200-day moving average is now well behind at $0.6522, setting the stage for an attack on a series of July peaks around $0.6790.

Despite the late comeback, the defining feature of 2019 was a dearth of volatility, which reached its lowest so far this century. The Aussie's entire trading range for the year was just over 6 cents, the smallest in at least two decades.

Easily the single biggest move came on Jan. 3, when the Aussie sank 4% in a matter of minutes as a "flash crash" swept through an illiquid holiday-hit market. There are fears the same could happen this week with Japan closed and Japanese retail investors heavily short of yen and long of risky high-yielding currencies, including the Turkish lira and the South African rand.

"It's worth noting here that the Financial Futures Association of Japan has already warned of market instability as the holidays create a liquidity vacuum," said Rodrigo Catril, a senior FX strategist at NAB. "If investors get hit with margin calls, forced liquidations could be triggered."

For bonds, it has been a bumper year with yields hitting all-time lows right across the curve. Futures have pulled back from record highs in recent weeks as progress in the Sino-US trade talks seemed to lessen risks to the global economy, but still hold hefty gains overall.

While the 10-year contract had retreated to a five-month low of 98.5850, that compares to 97.6800 at the end of 2018. The three-year bond contract stood at 99.085, against 98.200 a year earlier.