SYDNEY/WELLINGTON: The Australian and New Zealand dollars were holding hefty gains for the week on Friday, in part due to the growing perception the Reserve Bank of Australia may not ease again this year.
The gains came even as solid US data only added to speculation the Federal Reserve will soon pull back on its super easy monetary easing.
The Aussie stood at $0.9133, from $0.9146 late in local trade, not far from a three-week peak of $0.9188 on Thursday. It was also at one-month highs against the euro and yen .
Technicals suggest a failure to break above heavy resistance at $0.9200 could signal a correction and reinstate short positions. Support was seen at $0.9110, ahead of $0.9060.
The Aussie has gained 2.5 percent so far this week against its US counterpart as markets pared back expectations for more rate cuts. Interbank futures <0#YIB:> show a 40 percent chance of a rate cut by Christmas, down from more than 100 percent a couple of weeks ago.
Swap markets are actually pricing in 9 basis points of tightening on a one-year horizon, a huge turnaround in just the past week.
Ironically, though, the resulting rise in the Aussie has made it more likely the RBA will have to cut again. The central bank has been counting on a lower currency to boost export revenues and ease competitive pressures on domestic industries.
For now, investors were cautious ahead of an influential US payrolls report due later on Friday. A strong reading could cement the case the Fed will scale back its asset-buying programme as early as this month.
For some though, the data outcome has become nearly irrelevant.
"The jobs data matters less given the recent string of strong (US) data. It's not that the payroll is the tipping point," said Annette Beacher, head of Asia-Pacific Research at TD Securities in Singapore.
She expects the Fed to announce a small start to tapering on Sept. 17.
The run of upbeat data shoved US Treasury yields sharply higher, and Australia followed. Yields on 10-year Australian government cash bonds surged to 4.16 percent, the highest in nearly 18 months.
The kiwi dollar held near two-week highs at $0.7908 , from an overnight low of $0.7856, showing a gain of 2.4 percent for the week.
A report by the Bank of International Settlements showed both Antipodean currencies increased their share of global forex trade, as Asian central banks in particular sought to reduce their exposure to the dollar and the euro.
The Australian dollar was the fifth most-actively traded currency, with its share rising to 8.6 percent from 7.6 percent.
The New Zealand dollar's share inched up to 2 percent from 1.6 percent three years ago.
Australian bond futures fell to two-month lows with the three-year bond contract down 7 ticks to 96.950. The 10-year contract also retreated 7 ticks to 95.860.
New Zealand government bonds eased, sending yields as much as five basis points higher at the long end of the curve.
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