Australian, New Zealand dollars set for weekly gains amid global easing expectations

AUD, Kiwi Dollar in focus: The Australian and New Zealand dollars are poised for weekly gains as optimism grows over potential interest rate cuts in the US and Europe starting in June. 

However, much hinges on the outcome of a crucial US jobs report due later in the day.

The Australian dollar stood strong at $0.6615, having surged 0.8 per cent overnight to reach $0.6625, its highest level in five weeks. 

However, this level has proven to be near-term resistance, while support lies at the 200-day moving average of $0.6563.

With a 1.8 per cent increase over the past two sessions, the Aussie is on track for a weekly gain of 1.4 per cent.

Similarly, the New Zealand dollar was steady at $0.6169, following a 0.7 per cent surge overnight to $0.6175. It has gained 1.4 per cent over the past two sessions and is set for a weekly gain of 1 per cent.

Both currencies faced pressure until Federal Reserve Chair Jerome Powell's reassurance on Wednesday that US rates are likely to decrease this year. 

Powell's dovish tone further supported the anticipation of rate cuts. 

Moreover, the European Central Bank left its benchmark rate unchanged at 4 per cent on Thursday, hinting at a potential cut in June. 

Investors are increasingly optimistic about rate cuts from both the ECB and the Fed next month.

The US dollar has weakened to its lowest level in two months against major currencies, also impacted by the strengthening yen due to speculation of a policy shift in Japan. 

Investors are closely watching the non-farm payrolls report on Friday, which could majorly impact the Australian dollar's rally.

Kristina Clifton, an economist at the Commonwealth Bank of Australia, suggests that changes in seasonal hiring patterns in the US may have inflated January's payroll expansion at the expense of February's. This could potentially result in a weaker expansion, putting pressure on the USD and possibly causing the AUD/USD pair to test resistance at 0.6659.

In bond markets, Australian three-year government bond yields fell 8 basis points this week to 3.640 per cent, while 10-year yields dropped 13 basis points to 4.022 per cent, marking a positive week for bonds.

(With Reuters Inputs)