SYDNEY/WELLINGTON, Nov 20 (Reuters) - The Australian and New Zealand dollars were heading for weekly gains on Friday as a spike in risk appetite sparked a wave of short covering.
The Australian dollar AUD=D4 stood at $0.7194, having rallied 1.1 percent on Thursday. It has gained 1 percent for the week, having proved resilient to sliding commodity prices, particularly iron ore, Australia's top export earner.
"The inability for any of the commodity currencies to sell off on these huge commodity moves makes me nervous about USD positioning over the next 5 trading days," CitiFX Wire in a note.
A sustained break above the 100-day moving average of $0.7213, a level tested three times this month would be a bullish signal and open the way to $0.7384.
It made even bigger strides against the euro which fell to A$1.4912, not far from a three-month low of A$1.4865 touched on Thursday.
The common currency has dropped 3.3 percent so far in November and if sustained, it would be the biggest monthly fall in over a year.
The Aussie held near three-month highs against the yen.
The New Zealand dollar was another strong performer at $0.6554 after gaining 1.4 percent on Thursday. It was up 0.4 percent this week. Resistance was found near $0.6580.
ANZ Bank noted speculators had been caught very long of U.S. dollar when minutes of the Federal Reserve's last meeting affirmed expectations of a December hike but also point to a very gradual tightening cycle.
"Markets were poorly positioned and with nothing new to drive USD further, NZD/USD squeezed higher," it said.
Investors also took note of a bounce in NZX dairy futures and broader stability in commodities.
New Zealand government bonds were mixed. Yields were higher among the shorter-dated bonds.
Australian government bond futures rose, with the three-year bond contract up a tick at 97.880. The 10-year contract added 3.5 ticks to 96.0850, while the 20-year contract gained 4 ticks to 96.5600.