Australia, NZ dlrs Resume Bull Run, Bonds Outperform

SYDNEY, Jan 13 Reuters The Australian and New Zealand dollars resumed their uptrend on Wednesday as dovish comments from Federal Reserve members undermined the U.S. dollar, while local bonds also managed to outperform their U.S. counterparts.

The Aussie bounced to 0.7775 and away from a 0.7666 low touched at the start of the week. The next chart barriers are 0.7798 and the recent peak at 0.7819.

The kiwi dollar firmed to 0.7230 from Mondays trough at 0.7148, which now becomes major chart support. Resistance lies around 0.7280 and the January peak of 0.7314.

The U.S. currency took a knock when a couple of Fed presidents played down the risk of an early tapering of asset purchases, helping spark a rally in Treasuries.

That was mirrored in the Australian bond market where 10year yields eased a touch to 1.09, from a sevenmonth top of 1.118.

Treasuries had sold off last week on expectations a Democratic controlled U.S. Senate would allow a much larger fiscal spending program, and the borrowing to fund it.

Australian bonds managed to fare better than their U.S. counterparts, with the spread between 10year yields swinging to 0.2 basis points from 7 basis points early last week.

The outperformance of AUD rates against USTs is justified, in our view, given the relative fiscal outlooks of the two countries, said Jack Chambers, a rates strategist at ANZ.

We think this can persist and the 10year spread go negative.

He noted Australian bond issuance over the next six…

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