Australia, New Zealand dollars gain on greenback as rate outlooks diverge

By Wayne Cole

SYDNEY, Dec 11 (Reuters) - The Australian and New Zealand dollars held near multi-month highs on Thursday after a U.S. rate cut dragged on the greenback, while domestic jobs data were too mixed to provide further momentum.

The Aussie stood at $0.6665 AUD=D3, having climbed 0.5% overnight to a three-month peak of $0.6685. The bullish break of resistance at $0.6650 opens the way to the September peak of $0.6706, while support is down around $0.6630.

The kiwi dollar was steady at $0.5811 NZD=D3, after rising 0.6% overnight to a two-month top of $0.5823. A push past $0.5844 could see a run toward its September high of $0.6007.

Both had gained when the Federal Reserve cut interest rates by 25 basis points and delivered an outlook that was not as hawkish as some had anticipated.

The Fed also surprised by announcing it would start buying Treasury bills as soon as this Friday, putting downward pressure on short-term U.S. yields and the dollar.

The easing comes just a couple of days after the Reserve Bank of Australia ruled out any further cuts at home, and flagged the risk of hikes should inflation stay stubbornly high.

Data out Thursday showed a surprise 23,100 drop in employment for November, as full-time jobs more than reversed a big gain from the previous month.

The jobless rate also surprised by holding at 4.3%, though only because more people stopped looking for work.

Overall, markets were still implying around a 23% chance the RBA would hike at its next meeting in February. A quarter-point rise in the 3.6% cash rate is almost fully priced for June, with 46 basis points of easing implied for all of 2026. 0#AUDIRPR

"The RBA still views the labour market in totality as a bit too tight to bring inflation back to target," said Harry Ottley, an economist at CBA.

"Looking through some of the noise, there is nothing in today's jobs release to dissuade them from this view."

The drop in U.S. yields did offer some reprieve for domestic bonds, which have taken a beating in recent weeks as investors swung to wagering on a policy tightening.

Yields on 10-year Australian government bonds AU10YT=RR fell 9 basis points to 4.717%, and off highs last seen in late 2023. Three-year bond futures YTTc1 bounced 10 ticks to 95.870, after briefly touching two-year lows.