SYDNEY, Dec 2 (Reuters) - The Australian and New Zealand
dollars hovered near multi-month highs on Wednesday while bonds
took a beating as surprisingly strong domestic data and more
promising news on coronavirus vaccines underpinned risk assets.
The Aussie was a shade firmer at $0.7378 and just
off a three-month high of $0.7408. It still faces stiff
resistance at the September peak of $0.7413 but a break would
take it to ground last trod in mid-2018.
The kiwi dollar held at $0.7057 after having
reached $0.7072 at one stage, the highest since April 2018. The
break of chart resistance at $0.7060 added to the bullish
outlook, though many technical indicators are overbought after
weeks of gains.
Data showed Australia's economic growth rebounded by a
record 3.3% in the third quarter as an easing in pandemic
restrictions unleashed pent-up consumer demand.
With the virus now all but contained in Australia, growth
looks likely to be solid this quarter too.
Reserve Bank of Australia (RBA) Governor Philip Lowe called
the figures "good" news, while noting there was a long way yet
to full recovery.
Lowe said he had an "open mind" on whether to expand the
RBA's A$100 billion ($73.80 billion) bond-buying programme and
much would depend on how the economy fared and whether other
central banks were still easing policies.
Kim Mundy, a senior economist at CBA, reckoned the RBA would
also have to reconsider its 0.1% target for three-year bond
yields if the economy continued to outperform.
"We expect the RBA will either remove or increase the target
yield by the middle of next year, which will further support AUD
in 2021," said Mundy. "We expect AUD will lift to $0.7800 by
The upbeat data added to selling pressure on bonds, which
had already been hit by a sharp jump in Treasury yields amid
renewed talk of possible U.S. fiscal stimulus.
Yields on Australian 10-year bonds climbed 7
basis points to 0.998%, and back near a November top of 1.006%.
The 10-year futures contract slid 8 ticks to 99.0050.
The RBA has been buying longer-dated bonds in part to try
and keep yields down and lessen any increase in the Aussie.
($1 = 1.3550 Australian dollars)
(Editing by Subhranshu Sahu)