SYDNEY: The Australian and New Zealand dollars eased off multi-month highs on Friday as the latest rush past major chart barriers left them looking stretched in the near term. Both currencies have rallied in recent weeks as the prospect of a vaccine-fuelled global recovery next year boosted risk assets and toppled the safe-haven US dollar.
The Aussie was resting at $0.7426 after reaching $0.7449, heights last seen in August 2018. Resistance is layered between $0.7453 and $0.7484. The kiwi backed away to $0.7057 having stretched as far as $0.7104, the first ascent atop 71 cents since April 2018. The next resistance barrier is $0.7150, with an ultimate target of $0.7395.
Some analysts cautioned a pause was due given the currency has climbed 6.8% in just five weeks. "NZD/USD has reached its multi-week target of $0.7100, and while further near-term gains are possible, we note that it is getting technically stretched and we will be watching for signs of a corrective pullback," said Imre Speizer, head of NZ market strategy at Westpac.
Australia's economy has also rebounded as containing the coronavirus allowed consumers to go shopping and house hunting. Figures out on Friday showed retail sales jumped 1.4% in October as the state of Victoria reopened after its marathon lockdown, while card data from banks show spending surged through Black Friday and Cyber Monday.
That strength combined with a global shift to risk has seen Australian 10-year bond yields rise 21 basis points over the past month to 0.999%. That left the spread over Treasuries at the widest since mid-October, even though the Reserve Bank of Australia (RBA) was busy purchasing long-term debt.
Jack Chambers, a rates strategist at ANZ, argued bonds could rally next week should the European Central Bank aggressively expand its asset buying program as some suspect.