SYDNEY, Dec 18 Reuters The Australian and New Zealand dollars were heading for their seventh straight week of gains on Friday, given added impetus by surging commodity prices globally and higher bond yields at home.
The Aussie stood at 0.7616 having climbed 1.1 for the week to touch 0.7639. That was the highest since June 2018 when it topped at 0.7677, the next major chart target.
The kiwi rested at 0.7138, after reaching 0.7170 to be up 0.9 on the week. A breach of resistance at 0.7150 opened the door to 0.7395, a peak from April 2018.
Both currencies have been buoyed by the outperformance of their domestic economies, where the coronavirus has been mostly contained, and the broad strength of global commodity prices.
Iron ore, in particular, has been on a stellar run amid robust Chinese demand and concerns about supply, and the ore is Australias single largest export earner. When we look at it through the lens of commodity prices and Australias Terms of Trade it is not difficult to conclude that significantly higher levels are readily justified, said analysts at NAB in a note.
At the same time, Australian bond yields had risen faster than those in the United States such that the spread between fiveyear yields had swung to zero now, from as much as 18 basis points in November.
The fiveyear yield was last at 0.38, having touched a threemonth high of 0.42 overnight.
As a result, NAB now saw the Aussie reaching 0.8000 by mid 2021, instead of early 2022, and to top out…