By Swati Pandey and Charlotte Greenfield
SYDNEY/WELLINGTON, Jan 19 (Reuters) - The Australian and New Zealand dollars came off multi-week peaks on Thursday as their U.S. counterpart staged a sharp rebound after Federal Reserve Chair Janet Yellen suggested U.S. interest rates could rise quickly this year.
The Australian dollar AUD=D4 was sitting at $0.7500 in late morning trading as it drifted away from a two-month high of $0.7569 touched this week. It slipped 0.8 percent in the previous session, its biggest one-day drop since Dec.14.
Analysts see chart support in the $0.7465/$0.7447 zone as they remained cautious ahead of U.S. President-elect Donald Trump's inauguration on Friday.
"For AUD moves around the inauguration, it could come down to whether Trump puts more emphasis on a strong U.S. dollar or on protectionism," said Matt Simpson, senior analyst at ThinkMarkets.
"Any talk (against) a strong greenback should provide AUD/USD support, whilst protectionism and tariffs would likely weigh on commodity currencies."
The U.S. dollar, which hit a 14-year high against a basket of currencies after Trump's upset victory in November, has had a rough start to the year.
But Yellen infused new life into the greenback on Wednesday when she said "waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both."
Locally, employment data for December failed to inspire traders with the jobless rate ticking up to a six-month high even though full-time work rose for a third straight month. bigger picture is that the labour market still looks fragile," said Paul Dales, chief economist at Capital Economics. "That is a further restraint on wage and income growth."
Across the Tasman, the New Zealand dollar NZD=D4 was subdued too, after skidding 1.3 percent in its biggest one-day percentage loss since Nov. 9.
The Kiwi stood at $0.7121, from a high of $0.7219 hit earlier this week.
Economists at Westpac expect the Kiwi to sink to $0.6800 in the next three months due to a rallying U.S. dollar.
New Zealand government bonds 0#NZTSY= slid, sending yields 12.5 basis points higher at the long end of the curve.
Australian government bond futures followed Treasuries lower, with the three-year bond contract YTTc1 down 5 ticks at 97.95. The 10-year contract YTCc1 fell 8.5 ticks to 97.20. (Editing by Shri Navaratnam)