SYDNEY, Feb 17 (Reuters) - The Australian and New Zealand dollars were heading for a third day of gains on Thursday as markets remained optimistic on Ukraine and local data showed the labour market had weathered a wave of coronavirus cases.
The Aussie edged up to $0.7211 , after gaining 0.6% overnight, and looked set to test last week's high of $0.7248. A break would open the way to $0.7275 and $0.7314, while support lies at $0.7158 and $0.7100.
The kiwi dollar pushed to $0.6698 , having climbed 0.6% overnight and further away from support at $0.6593. A breach of the recent top at $0.6733 could see a return to $0.6800.
Australian data showed the economy still managed to create a net 12,900 jobs in January even as an Omicron COVID-19 wave slugged activity, keeping unemployment at a 13-year low of 4.2%. read more
That resilience should encourage the Reserve Bank of Australia (RBA), which wants a tight labour market to drive up wages before it starts to raise interest rates.
Diana Mousina, a senior economist at AMP Investments, expects wages will rise faster than the RBA assumes.
"This is why we expect the RBA to start hiking interest rates in August," she said.
"However, the strength in the jobs market and the heightened global inflation backdrop mean that the risk is an earlier rate hike in May or June."
Futures currently imply around a one-in-four chance of a first rise in May, and are fully priced for a move to 0.25% in June. Another four hikes are seen this year to take rates to 1.25%.
Markets are even more hawkish on the U.S. Federal Reserve, pricing in at least six hikes to 1.5% by year-end.
Yet that still lags the Reserve Bank of New Zealand (RBNZ) which has already hiked twice to 0.75% and is considered certain to move to 1.0%, if not more, at a policy meeting on Feb. 22.
Investors see rates reaching 2.5% by the end of the year before levelling off, and it is quite possible the RBNZ could lift its projected peak for rates to 3.0% next week.
That risk has seen three-year swap rates hit their highest since early 2016 at 2.58%, while 10-year bond yields are up at 2.818%.
Editing by Kenneth Maxwell