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Australia, NZ dlrs hover near 2-mth highs on sterling

Published 17/01/2017, 12:46 pm
Australia, NZ dlrs hover near 2-mth highs on sterling
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By Swati Pandey and Charlotte Greenfield

SYDNEY/WELLINGTON, Jan 17 (Reuters) - The Australian and New Zealand dollars held near two-month highs against the pound on Tuesday ahead of a speech by Prime Minister Theresa May that could set Britain on course for a "hard Brexit".

Sterling was on the defensive at A$1.6117, having touched a two-month trough below A$1.6000 GBPAUD= in the previous session. It plunged 3.5 percent last week, the biggest fall since June last year.

May will say Britain will not seek a Brexit deal that leaves it "half in, half out" of the European Union, according to her office. have been concerned that leaving the single market would hurt exports and foreign investment.

Against the New Zealand dollar, the pound GBPNZD=R ticked up to NZ$1.6952, after dropping 1.3 percent to a two-month low of NZ$1.6833 in the previous session.

Meanwhile, the antipodean currencies stayed near recent peaks versus their U.S. counterpart.

The Australian dollar AUD=D4 stood at $0.7469, having repeatedly met stiff resistance above 75 cents.

The Aussie has benefited in recent weeks from rising iron ore prices, boosting the country's exports and national income, making it the best performing major currency so far this month.

Analysts see significant chart support at $0.7460.

"But we are still seeing resistance at $0.7525 ... suggesting that it will take a bit more than rallying iron ore prices to crack that nut," said Stephen Innes, senior trader at OANDA Australia and Asia Pacific.

Analysts were also circumspect about the near-term trends once Donald Trump is inaugurated as the president of the United States on Friday.

"If Trump maintains his protectionist mantra and targets China, for example, we may find that AUD/NZD fall as Australia is their (China's) largest trade partner," said Matt Simpson, senior analyst at ThinkMarkets.

The New Zealand dollar NZD=D4 came off a one-month high of $0.7149 against the greenback to stand at $0.7102.

New Zealand government bonds 0#NZTSY= eased, sending yields 1 basis point higher.

Australian government bond futures were down too, with the three-year bond contract YTTc1 off 2 ticks at 97.99. The 10-year contract YTCc1 dipped 1 tick to 97.26. (Editing by Simon Cameron-Moore)

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