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Australia, NZ dlrs Rally as Markets Look Beyond Omicron

SYDNEY, Dec 24 (Reuters) - The Australian and New Zealand dollars held near multi-week highs on Friday as markets became more confident that Omicron would not derail global economic growth, even as it spread wider.

The Aussie was up at $0.7235 , having cleared resistance at $0.7224 to hit a five-week peak of $0.7252 overnight. That left it 1.5% higher for the week and a good way from the recent 13-month trough of $0.6994.

Resistance lies at $0.7275 and $0.7368, with support at $0.7195.

The kiwi dollar stood at $0.6821 , after reaching a three-week top of $0.6843. It was 1.3% firmer on the week and away from its recent 13-month low of $0.6702. Resistance lies at $0.6867.

While the spread of the Omicron coronavirus variant triggered more restrictions globally, two drugmakers said their vaccines protected against it while studies showed the variant carried a lower risk of hospitalisation. read more

In Australia, most states had reinstated mask mandates and some social distancing rules, but governments were vowing not to lock down again given the high vaccination rates. read more

So far, the economy has held up well with spending on bank cards still solidly above pre-pandemic levels and payrolls having recovered all the losses suffered during recent lockdowns.

"With the household savings rate reaching an eye-watering 20% in Q3 and consumer confidence holding up, it is only a matter of time before consumption bounces back in earnest," said Ben Udy, an economist at Capital Economics.

"Our forecast that consumption will rise by 8% next year is well above the analyst consensus of 4.8%."

There are now no major economic releases due until the second week of January. Key data for the Reserve Bank of Australia (RBA) will be the December jobs report on Jan. 20 and consumer prices for the fourth quarter on Jan. 25.

Analysts expect the CPI report will show another high reading for underlying inflation which could prompt the RBA to end its bond buying in February and maybe soften its insistence that a rate hike is unlikely in 2022.

The market is almost fully priced for a hike in the 0.1% cash rate to 0.25% by June and for rates of at least 0.75% by the end of the year.

The Reserve Bank of New Zealand (RBNZ) has already hiked twice to 0.75% and is widely expected to move to 1.0% at its Feb. 23 policy meeting. Another four hikes are then tipped by October next year.

Editing by Muralikumar Anantharaman

Source: Reuters

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