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Australia, NZ dollars supported by global commodity demand

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The Australian and New Zealand dollars consolidated near multi-week highs on Wednesday as a spate of rousing factory surveys from around the globe seemed to bode well for the two countries' commodity exports.

[SYDNEY] The Australian and New Zealand dollars consolidated near multi-week highs on Wednesday as a spate of rousing factory surveys from around the globe seemed to bode well for the two countries' commodity exports.

The Aussie dollar was steady at US$0.7826, having made a fresh three-month top at US$0.7845 overnight. It faces stiff chart resistance at US$0.7884 and US$0.7898, twin peaks from October.

The New Zealand dollar faded a touch to US$0.7090, after topping out at US$0.7130 overnight.

JPMorgan's measure of global manufacturing gained another 0.6 point in December to reach 55.6, the strongest reading since February 2011.

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"With the forward-looking new orders increasing in similar fashion, the December survey paints a very upbeat picture for global manufacturing heading into the New Year," said JPMorgan economist David Hensley in a note.

That in turn should be positive for commodity demand, and prices. Iron ore futures, for instance, hit their highest since mid-September this week at US$73.90, having rebounded from a low near US$58 in just a couple of months.

Australia is the world's leading exporter of iron ore, and a major exporter of coal, gold, copper and liquefied natural gas.

New Zealand's export mix is dominated by soft commodities, including dairy and timber, and has also been doing well from increased demand out of Asia.

A global auction of dairy overnight showed the sharpest rise in prices since May, though that was mainly due to tightened supplies from New Zealand itself, and had a limited impact on the kiwi.

The Global Dairy Trade Price Index (GDT) gained 2.2 per cent at the first auction of the year, after the world's biggest dairy processor, Fonterra, dropped its forecast for New Zealand milk collection for the second time in as many months.

New Zealand government bonds slipped in line with global debt markets, pushing yields up around four basis points.

Australian government bond futures were likewise lower, with the three-year bond contract off 2.5 ticks at 97.800. The 10-year contract eased five ticks to 97.2650.

REUTERS