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Australia, NZ dlrs head for heavy weekly losses on yen

Published 17/06/2016, 01:00 pm
© Reuters.  Australia, NZ dlrs head for heavy weekly losses on yen
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By Cecile Lefort and Charlotte Greenfield

SYDNEY/WELLINGTON, June 17 (Reuters) - The Australian and New Zealand dollars edged up against their U.S. counterpart on Friday and bounced off multi-year lows versus the yen, though they were still on track for a hefty weekly decline against the Japanese currency.

The Australian dollar AUD=D4 rose to $0.7390, from $0.7364 early, having recovered from a low of $0.7286 touched on Thursday in a volatile session.

It was up 0.2 percent for the week and if sustained, it would be the third week of gains. The Aussie has skidded around 11 percent this year.

The Aussie has been buffeted this week by a flare-up in global risk sentiment, particularly Britain's potential withdrawal from the European Union.

"The Aussie dollar seems to have been caught up in the whirlwind Brexit vortex," said Stephen Innes, senior trader at FX and CFD firm OANDA Australia and Asia Pacific, seeing the currency at the mercy of Britain's uncertain future in the short term.

Resistance was found at this week's peak of $0.7450, a level tested twice. A break above would target a one-month high of $0.7505. Key support was found around $0.7330.

A rally in Japanese stocks helped the Antipodean currencies regain some lost ground against the safe-haven yen with the Aussie up 0.7 percent to 77.31 yen AUDJPY=R on the day, away from a four-year trough of 75.56. Yet, it was still 2 percent lower for the week.

The Kiwi bounced to 73.72 yen NZDJPY=R , from 72.28 touched on Thursday, a level not seen since early 2013. It has skidded 2.3 percent this week.

The New Zealand dollar NZD=D4 was a touch firmer at $0.7051, from a low of $0.6970 in the last session and was on track to end the week where it started.

"Kiwi is once again showing its resilience to the current 'risk off' environment - hardly surprising given where our interest rates sit, and given that we live in a world of almost infinite liquidity," said David Croy, ANZ senior rates strategist in a research note.

Better-than-expected gross domestic product data released on Thursday and the Federal Reserve's more dovish tone had also provided strength in the Kiwi, though analysts warned to expect more volatility in the lead up to the June 23 Brexit vote.

New Zealand government bonds 0#NZTSY= gained, sending yields 1.5 basis points lower at the long end of the curve.

Australian government bond futures retreated from all-time highs touched earlier in the session, with the three-year bond contract YTTc1 off 6 ticks at 98.480. The 10-year contract YTCc1 skidded 8.5 ticks to 97.9000, while the 20-year contract YXXc1 dropped 7 ticks to 97.3450. (Editing by Kim Coghill)

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