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Australia, NZ dlrs off recent highs after Fed comments, data

Published 03/12/2015, 12:34 pm
Updated 03/12/2015, 12:40 pm
Australia, NZ dlrs off recent highs after Fed comments, data
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By Cecile Lefort and Rebecca Howard

SYDNEY/WELLINGTON, Dec 3 (Reuters) - The Australian and New Zealand dollars came off multi-week peaks on Thursday after hawkish-sounding comments from the head of the Federal Reserve underlined the case for an interest rate hike this month and dented appetite for risk assets.

The Australian dollar lost some shine at $0.7287, from $0.7305 early, though it remained within reach of a seven-week high of $0.7345 touched on Wednesday. Support was found at $0.7250.

Fed Chair Janet Yellen said on Wednesday she was "looking forward" to a rate rise that will be seen as a testament to the economy's recovery from recession.

Also undermining the Aussie was data showing Australia's trade deficit widened to A$3.3 billion, versus forecasts of A$2.6 billion, due in part to weaker commodity prices.

"It is a clear deterioration from the 2014 average of A$0.75 billion (deficit)," said Sean Callow, a senior currency strategist at Westpac Bank.

Dealers said investors were keen to book profits following the recent stellar run of the Aussie, which is up nearly 3 cents over the month. The euro, yen and pound pared recent losses but still held near multi-month lows against the Aussie.

The New Zealand dollar NZD=D4 edged down to $0.6633 on Thursday, after rising as high as $0.6681 the previous day, as the U.S. dollar strengthened on strong employment data.

The kiwi remained up for the week, boosted in part by stabilising dairy prices at a global dairy auction, which the country's central bank is likely to take into account at its policy meeting next week.

The vast majority of analysts polled by Reuters expect the Reserve Bank of New Zealand to cut interest rates by 25 basis points to 2.5 percent, in part to rein in the local dollar.

New Zealand government bonds gained, sending yields 1 basis point lower along the curve.

Australian government bond futures fell, with the three-year bond contract off 1 tick at 97.890. The 10-year contract eased 3 ticks to 97.1400, while the 20-year contract held steady at 96.6500. (Editing by Sam Holmes)

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