By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Dec 22 (Reuters) - The Australian and New Zealand dollars edged up on Tuesday to find stiff chart resistance in trading thinned by a holiday-heavy week.
The Australian dollar AUD=D4 rose as high as $0.7204 where it met solid offers at the 72 U.S. cents chart barrier. At $0.7195 it has gained one full cent since touching a one-month trough last week.
Yet, it is still down 12 percent for the year, largely due to a diverging interest rate outlook between the United States and Australia.
The Aussie did have a go at testing this year's high against its Canadian counterpart AUDCAD=R . It powered up to C$1.0040 and a break above C$1.0066 would bring September's high of C$1.0229 in sight. Tumbling oil prices have taken a toll on Canada's Loonie, which is down around 6 percent this year.
The New Zealand dollar NZD=D4 was "grinding higher" at $0.6785 as U.S economic data disappoints, said ANZ Bank. Major resistance was found at 68 cents.
With more U.S. data due later ECONUS , the Kiwi could push higher still, it says. "Richmond Fed and the manufacturing sector is likely to elicit more of a reaction than the third read of Q3 GDP."
ANZ sees resistance at $0.6820 and support at $0.6730.
New Zealand government bonds 0#NZTSY= gained, sending yields 3 basis points lower across the curve.
BNZ Senior Market Strategist Kymberly Martin noted bond swap spreads were widening further. From 10 basis points a few weeks ago, 10-year swap spreads were now approaching 30 basis points and "we see further widening near-term."
She said bonds were likely to be supported in the new year as there was a drought of new issuance until mid-February.
Australian government bond futures were a touch firmer, with the three-year bond contract YTTc1 up 1 tick at 97.940. The 10-year contract YTCc1 added 1.5 tick to 97.1900, while the 20-year contract YXXc1 was 1 tick higher at 96.6900.