By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Feb 17 (Reuters) - The Australian and New Zealand dollars ran out of puff on Wednesday after more wild swings in oil prices weighed on commodity currencies, while investors were cautious ahead of the minutes of the Federal Reserve's last policy meeting.
The Australian dollar AUD=D4 eased to 71 cents, from a peak of $0.7182 touched on Tuesday. Dealers cited sellers around $0.7130 and a break above would target $0.7180. Support was found at $0.7060.
The Aussie lost steam after an initial sharp drop in oil prices led to a vicious reversal against the yen. It eased to 81 yen AUDJPY=R , from a peak of 82.41 on Tuesday, but was still far above a four-year trough of 77.57 set last week.
The Aussie remained vulnerable to more swings in sentiment as the market awaits to see the latest balance of opinion among policy makers on the prospect of further rate hikes by the Fed.
The New Zealand dollar NZD=D4 was subdued at $0.6566, having shed a cent overnight when a survey showed a marked decline in inflation expectations in New Zealand.
OM Financial Private Client Manager Stuart Ive said the quarterly survey may well test the Reserve Bank of New Zealand's reluctance to cut rates again.
A soft overnight dairy auction also added to the downward pressure, although milk prices fell less than expected. Ive said the Kiwi has support around $0.6470.
New Zealand government bonds 0#NZTSY= were little changed. Investor appetite for local debt will be tested on Wednesday when the NZ Local Government Funding Agency holds its first tender since December.
BNZ FX strategist, Kymberly Martin, noted spreads over government bonds had widened notably since the last tender, and outright yields were attractive in a world of negative rates.
"However, in the current environment of limited appetite for credit risk, the bonds may have to work harder to attract buyers," said Martin.
Australian government bond futures were a touch firmer, with the three-year bond contract YTTc1 up 1 tick at 98.160. The 10-year contract YTCc1 was also 1 tick higher at 97.4900, while the 20-year contract YXXc1 was steady at 96.9450. (Editing by Jacqueline Wong)