* Some traders see U.S. bond yields peaking out
* Australian dollar jumps on massive jobs increase
* Kiwi falls after dovish RBNZ comments
By Hideyuki Sano
TOKYO, Dec 9 (Reuters) - The dollar lost steam on Thursday as U.S. bond yields dipped after a sizzling rise in the past few days, while the Australian dollar surged on data showing the country's employment is growing far faster than expected.
Ten-year U.S. Treasury yields dropped about five basis points in Asia, leading some traders to think the dumping of U.S. bonds may have run its course, and undermining the yield attraction of the dollar.
"Everybody is still focusing on U.S. bond yields. My hunch is that we are near a selling climax in U.S. Treasuries. Such a feeling is also in the market, dampening the dollar now," said Koichi Yoshikawa, head of forex trading at BNP Paribas in Tokyo.
Investors dumped U.S. Treasuries this week after a deal in Washington to extend tax cuts fuelled concerns of inflation and a swelling budget deficit. Some analysts said the tax cuts could boost growth by as much as a percentage point next year.
But some traders were starting to think the climb in yields is overdone, with two-year yields rising more than 20 basis points in two days to a 4-½ month high of 0.64 percent on Wednesday.
"That's almost like you had a rate hike," Yoshikawa said.
The greenback dropped 0.3 percent against a basket of major currencies. The dollar index fell to 79.77, struggling to break above the 80.00-81.00 area, which capped its November rally.
Still, some traders think there will be more position unwinding in U.S. Treasuries after many investors amassed bonds for months in expectations of massive buying by the U.S. Federal Reserve.
"This will end only when everyone has dumped their long positions. I think we are still far away from that," said a trader at a Japanese bank.
Against the yen, the dollar fell 0.3 percent to 83.78 yen, pressured by selling from Japanese exporters.
Traders said the dollar faced strong resistance around 84.40-60, an area it has repeatedly failed to break since late last month.
The euro rose 0.3 percent against the dollar to $1.3305, extending its rebound from a one-week low around $1.3180 on set on Wednesday. The euro gained momentum after hitting stop-loss orders at around $1.3280.
But its inability to hold gains above $1.3400 this week meant a probe lower was still possible, with a sustained break of $1.3180 opening the way to a test of $1.3060/50.
The European Commission welcomed Ireland's tough 2011 austerity budget, which received its first approval from parliament, opening the way for international loans to start flowing to Dublin.
AUSSIE SURGE
The euro was also helped by a surge in the Australian dollar, which jumped nearly one percent at one point following the release of surprisingly strong employment data in the country.
Australian employment grew by 54,600 in November, providing a resounding counterpoint to recent soft data and an omen that interest rates may not stay on hold for too long.
The Aussie dollar last traded at $0.9866, up 0.75 percent from late U.S. levels and breaking above resistance at around $0.9855.
The currency could test Tuesday's 3-½ week high of $0.9966 if it clears resistance from the top of ichimoku cloud at $0.9887.
Against the yen, the Aussie rose 0.5 percent to a 2-½ week high of 82.72 yen.
In contrast, the New Zealand dollar dropped to a one-week low at $0.7435, shedding about half a cent, after the Reserve Bank of New Zealand said it expected interest rates to rise less over the next two years than it had previously forecast.
RBNZ left rates unchanged at 3.0 percent as expected but said they should stay low for longer.
"The kiwi sagged given the much watered down tightening bias," said Annette Beacher, head of Asia-Pacific Research at TD Securities. "We can finally confirm that we are pushing out the next rate hike from March to July." (Additional reporting by Ian Chua in Sydney and Reuters FX analysts Krishna Kumar in Sydney and Rick Lloyd in Singapore; Editing by Joseph Radford)