Australia, NZ dlrs off Highs, 10yr Yields Hit SixMonth Top


SYDNEY, Jan 8 Reuters The Australian and New Zealand dollars ran into profit taking on Friday as markets speculated on when the U.S. Federal Reserve might taper its asset buying, sending longerdated Australian yields to sixmonth highs.

The Aussie eased off to 0.7756, and away from a 212 year peak of 0.7819. Yet it was still up 0.8 for the week, on top of a 1.2 gain the previous week.

The next targets are more 2018 tops at 0.7916 and 0.7988, followed by 0.8136, which was the highest since mid2015.

The kiwi dollar faded to 0.7252, from a top of 0.7314, but was still 1 higher on the week. Bulls are now eyeing highs from early 2018 at 0.7395 and 0.7437.

Dealers said speculators pared some short positions in the U.S. dollar on speculation the Fed would not now increase its bond buying program, given the rollout of coronavirus vaccines had improved the economic outlook for later in the year.

Instead, some officials had talked about tapering the purchases late in 2021, sooner than many in the market had anticipated.

That combined with talk of more fiscal stimulus as Democrats took control of the Senate to push longerterm Treasury yields higher and gave the U.S. dollar a lift after weeks of losses.

Australian 10year yields followed almost in lock step to reach 1.09 and keep the spread with the U.S. around zero. That left yields up 11 basis points for the week and at the highest since June.

Threeyear yields remain pinned near the Reserve Bank of Australias RBA target of…

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