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By Cecile Lefort and Rebecca Howard
WELLINGTON/SYDNEY, March 18 (Reuters) - The high flying New Zealand and Australian and dollars powered up to multi-month peaks on Friday as a slide in the U.S. dollar whetted risk appetites and boosted commodity prices.
The New Zealand dollar NZD=D4 pushed to its highest this year at $0.6866, having gained 1.9 percent on Thursday. The U.S. dollar continued to wilt in the wake of cautious comments by the Federal Reserve.
BNZ FX Strategist Jason Wong Friday said the kiwi is higher on all the major cross rates over the past month, apart from the Australian dollar.
"Right now it is benefiting from news the US Fed has gone "soft" on inflation. This is a significant development and our currency forecasts should be considered under review," said Wong.
"The risk is that the Kiwi holds up for longer than previously expected."
The kiwi was on track to post a weekly gain of 1.7 percent. It was last at $0.6857.
OM Financial Private Client Manager Stuart Ive said resistance at $0.6900 has come into focus as most central banks remain cautious.
"This places New Zealand's 2.25 percent yield high on money managers' radar," said Ive.
The Australian dollar AUD=D4 scaled a fresh eight-month summit of $0.7681, having gained a cent-and-a-half so far this week.
It pierced stiff resistance around 76 cents in part after prices of iron ore, Australia's top export earner, jumped 5 percent. It was last at $0.7662.
It has gained an impressive 7.2 percent so far this month and looked set to test the June 2015 peak of $0.7849. It also stood tall against the pound, which slumped for the sixth consecutive week.
Sterling stood at A$1.8871 GBPAUD=R , having slipped on Thursday to the lowest in over a year.
Australian government bond futures eased, with the three-year bond contract YTTc1 off 4 ticks at 98.040. The 10-year contract YTCc1 fell 2.5 ticks to 97.4200, while the 20-year contract YXXc1 shed 4.5 ticks to 96.8450.
The spread between 10-year and 3-year government bonds widened to 59 basis points, having earlier shrunk to the smallest in nearly a year at 57 basis points.
New Zealand government bonds 0#NZTSY= gained a tad, pushing yields half a basis point lower at the short end and 1.5 basis points lower at the long end.