By Swati Pandey
SYDNEY, Feb 16 (Reuters) - The Australian and New Zealand dollars hovered near two-week highs on Friday, bolstered by stronger commodity prices and a positive outlook for global growth, and as the greenback continued its downward spiral.
The Australian dollar AUD=D4 held at $0.7939, within kissing distance of Thursday's $0.7967 which was the highest since Feb.2. For the week, the Aussie is set for a solid 1.6 percent gain, after two straight weekly losses.
The New Zealand dollar NZD=D4 held near Thursday's high of $0.7411, a level not seen since late January. It was last down 0.2 percent at $0.7398.
For the week so far, the kiwi has already risen about 2 percent.
Volumes were generally light as many Asian countries were on holiday for the Lunar New Year.
The dollar index .DXY , which measures the greenback against a basket of currencies, has fallen every day so far this week and is set for its worst weekly showing since mid-2017.
The losses come despite a surge in U.S. Treasury yields as markets brace for three tightenings this year to around 2 percent.
The rate outlook is no longer providing support to the U.S. dollar amid increasing worries about the burgeoning budget and current account deficits in the world's largest economy.
Tax cuts and increased spending plans will see the budget shortfall explode to more than $1 trillion this year, while the added fiscal stimulus is likely to suck in more imports.
The resultant drop in the U.S. dollar was a boon to prices for Australia's commodity exports with everything from gold to copper and iron ore on the rise overnight.
The head of Australia's central bank appeared before a parliamentary economics committee on Friday where he stuck to his script of signalling steady rates for as far as the eye can see. neighbouring New Zealand, interest rates are seen at a record low 1.75 percent for some time, largely as inflationary pressures remain evasive.
New Zealand government bonds 0#NZTSY= rose, sending yields lower about 2 basis points.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 off 1 tick to 97.830. The 10-year contract YTCc1 was unchanged at 97.0850.