WELLINGTON/SYDNEY: The Australian dollar touched a fresh 28-year high against a declining U.S. currency on Thursday, while the New Zealand dollar made a six-week peak helped in part by board-based strength in global commodity prices. The Aussie basked at $1.0198 , having cleared the overnight high of $1.0184. That brought gains for the month to around 6.4 percent and left it almost 14 percent higher for the year. It last traded at $1.0163. The New Zealand dollar also boasted sizable gains to reach a high of $0.7691, having bounced off a low of $0.7585, which now provides support. Next major resistance was at $0.7727. The kiwi was last at $0.7666. The Aussie was not far from a record high on the euro at A$1.3008 , bringing its gains for the year to almost 23 percent, and near a 25-year peak on sterling at A$1.5248 . The currency was underpinned by renewed gains in metals prices with LME copper climbing to a record high, and six-week highs for zinc, lead and aluminium. Iron ore, one of Australia's top exports, holding above $170. Commodities have been buoyed by growing optimism on global growth prospects for 2011, coupled with expectations that monetary policy will stay stimulative in many major economies. Australia is a major exporter of commodities and the strength of prices is delivering a huge boost to the country's terms of trade, fuelling profits, investment, employment and incomes. That is a major reason the Reserve Bank of Australia (RBA) is expected to tighten policy further next year even as other developed nations keep their rates around record lows. "As such, Australia's yield advantage versus the major economies will remain historically wide, supporting a strong Aussie dollar," said John Kyriakopoulos, a currency strategist at National Australia Bank. "We expect the AUD to appreciate further against all the major currencies through to around the middle of 2011." He sees the Aussie reaching $1.0500 by mid-year and expects it to average $1.0000 over the whole of 2011. For its part, the U.S. dollar was undermined by a sharp drop in Treasury yields following a solid debt auction , and by Japanese selling against the yen. Australian debt futures also bounced but lagged behind the wild moves in Treasuries, so that the spread between 10-year yields widened to 229 basis points. The Australian three-year bond contract firmed 0.060 points at 94.650, while the 10-year contract rose 0.095 points to 94.370. The kiwi edged higher against the Aussie dollar at NZ$1.3250 after sliding to a 10-year low last week. New Zealand interest rate futures <0#NBB:> were a touch weaker at short end, but NZ government bonds were flat.

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