By Cecile Lefort and Charlotte Greenfield
SYDNEY/WELLINGTON, May 30 (Reuters) - The Australian and New Zealand dollars were pinned near multi-month lows on Monday after comments by Federal Reserve Chair Janet Yellen reinforced expectations of a U.S. interest rate hike as early as June.
The Australian dollar AUD=D4 fell to $0.7169, from $0.7186 late on Friday. A break of a three-month trough of $0.7145 would target the double bottom of $0.7108.
Having lost 0.5 percent last week, The Aussie was on track for its largest monthly drop in around 18 months with a 6 percent fall, mainly due to speculation that U.S. rates will go up soon.
Yellen said on Friday that a rate increase in the coming months "would be appropriate", if the economy and labour market continued to improve. undermining the Aussie was a further reduction in speculative long Aussie positions with net longs at just 124 contracts the week ending May 24, down from 25,000 in the previous week. Callow, a senior currency strategist at Westpac said it was the least bullish stance since 15 March.
Investors were cautious ahead of a busy week at home with gross domestic product, retail sales and trade data due for release. ECONAU
The New Zealand dollar NZD=D4 touched its lowest in two months at $0.6676, weakening from $0.6703 in early trade. It was last at $0.6694.
Support was found at $0.6670, then $0.6654.
The kiwi has dropped 4 percent this month, partly due to a disappointing milk payout forecast by cooperative Fonterra. Dairy is New Zealand's top export earner.
The Aussie continued its rebound against the Kiwi, strengthening to NZ$1.0717 from a low of NZ$1.610 touched last week. AUDNZD=R
New Zealand government bonds 0#NZTSY= eased, sending yields 2 basis points higher at the long end of the curve and four basis points higher at the short end of the curve.
Australian government bond futures eased, with the three-year bond contract YTTc1 off 3 ticks at 98.380. The 10-year contract YTCc1 slipped 1.5 ticks to 97.7300, while the 20-year contract YXXc1 was off 1 tick at 97.1250. (Editing by Simon Cameron-Moore)