* Aussie set for eighth consecutive week of gains * Still held back by option barriers at $1 * Kiwi up 0.2% on week; 4th straight week of gains By Mantik Kusjanto and Koh Gui Qing SYDNEY/WELLINGTON, Oct 15 (Reuters) - The Australian dollar looked set to rise for the eighth straight week on Friday, and investors were confident its rally could last even though it was struggling to hit the landmark parity level. In late trade, the Australian dollar traded at $0.9913, a good way under a 28-year high of $0.9994 hit offshore, but still up 0.15 percent for the week. That meant it had been rising every week since the week of August 22, its longest winning streak since June 2009. It is up 11 percent since the start of the year, the second top-performer among major currencies after the yen . While option barriers at $1.000 had prevented it from hitting parity against the U.S. dollar on Thursday, many traders believed the barriers merely postponed the inevitable. Australia's 4.5 percent interest rates, the highest in the developed world, its commodity-driven economic growth, a weak U.S. dollar and its boost to commodity prices should combine to lift the currency higher. "With commodity prices also rallying strongly, further gains in the Australian and New Zealand dollars appear likely," Deutsche Bank said. "There is some risk that in the near-term the Australian dollar (would) exceed our year-end forecast of $1." Underscoring expectations domestic rates would climb higher in coming months, Australian bond futures were soft. Three-year futures lost 0.04 points to 95.11, and the 10-year contract shed 0.05 points at 94.905. Losses in domestic bond futures contrasted with gains in U.S. Treasuries, which rose ahead of a speech by Federal Reserve Chairman Ben Bernanke at 1215 GMT, when he would shed light on the central bank's plans for quantitative easing. Many in the market believe the Fed would launch another round of quantitative easing in November. Any hints from Bernanke that that may not be so could spark a bout of U.S. dollar short-covering. Like the Aussie, the NZ dollar gave way to profit-taking. It slipped to $0.7575, after hitting a two-year high of $0.7645 in offshore trade. It was up 0.2 percent for the week, its fourth consecutive week of gains. "The kiwi is looking a little soft and tired. It's much like the Aussie and the euro," said ANZ-National senior dealer Alex Sinton. "It has run an awful long way and needs to correct back from some of those moves." Despite a series of disappointing data, the kiwi has risen around eight percent since September, thanks to a global selldown on the U.S. currency. Traders said profit-taking was likely to test kiwi's support around $0.7550, while resistance was expected at the $0.7645 level. The rise is not helping the competitiveness of New Zealand's struggling economy, but there is not much the country could do currently as markets are bracing for more global easing. "The signs are, with the policies that the U.S., UK and China are following mean that we are going to have to deal with a high dollar for another 12 or 18 months," Finance Minister told Radio New Zealand. But the NZ dollar has weakened against the Aussie dollar as the neighbouring economy went from strength to strength, giving it a much needed boost to export to Australia. The Aussie/kiwi was steady around NZ$1.308, after hitting a near six-month high of NZ$1.3176 in late September as no rate hike is expected in NZ for some more months. [NZ/POLL] NZ government bonds <0#NZTSY=> recovered, with yields down around one basis point across the curve.

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