By Swati Pandey and Charlotte Greenfield
SYDNEY/WELLINGTON, Jan 18 (Reuters) - The Australian dollar held near two-month highs on Wednesday as traders unwound their long positions in the greenback after U.S. president-elect Donald Trump expressed concerns at the currency's strength.
The Australian dollar AUD=D4 stood at $0.7542, a level not seen since Nov.14. It shot past a key resistance of $0.7525 in the previous session when it posted its biggest daily percentage gain since early September.
The New Zealand dollar NZD=D4 hovered near one-month highs at $0.7203, after posting its largest daily percentage gain in four months.
The Aussie is now up nearly 5 percent so far in January, making it one of the best performing major currencies this year.
That is a marked turnaround from late December when it hit a seven-month trough of $0.7160 as the U.S. dollar rode high on wagers that Trump's policies would stoke U.S. inflation. reflation trade seems to have faltered as Trump has failed to offer any details on his policies or on measures to revive economic growth. Instead, he told the Wall Street Journal that U.S. companies "can't compete with (China) now because our currency is strong and it's killing us".
Locally, investors will keep a close eye on jobs data for December due on Thursday to take the pulse of the Australian economy, which contracted in the third quarter of last year. While unemployment has been steady at three-year lows, jobs have been heavily skewed toward part-time work.
Meanwhile, a measure of Australia's consumer sentiment barely budged in January, data out on Wednesday showed. the Aussie held at one-week lows on the pound GBPAUD=R , after skidding 1.5 percent in the previous session following a speech by British Prime Minister Theresa May on plans to leave the European Union.
Investors latched on to her stated commitment to put a settlement agreement back to parliament, which could help soften the deal eventually.
That sent sterling soaring to its biggest one-day gain since at least 1998 against the U.S. dollar GBP= .
The New Zealand dollar too fell 1.3 percent against the British pound NZDGBP=R . However, it outperformed versus other currencies, fuelled by an auction in which global dairy prices inched up following losses in two previous auctions. Zealand government bonds 0#NZTSY= gained, sending yields 3.5 basis points lower at the long end of the curve.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 unchanged at 98.00. The 10-year contract YTCc1 rose 2.5 ticks to 97.295.