By Cecile Lefort and Naomi Tajitsu
SYDNEY/WELLINGTON, July 20 (Reuters) - The Australian and New Zealand dollars hovered near six-year lows on Monday, weighed down by weak commodity prices and a diverging interest rate outlook compared with the United States.
The Australian dollar AUD=D4 was down at $0.7358, having touched a low of $0.7350. It has shed nearly 5 percent this month partly on expectations of higher interest rates from the Federal Reserve this year.
Charts suggest further downside with daily moving averages pointing south. Key support was seen around the 72 cent-mark with major Fibonacci levels at $0.7184 and $0.7204.
A 3 percent drop in gold prices XAU= and pressure on copper rubbed salt into the Aussie's wound.
"The USD is set to remain firm, commodity prices are still under downward pressure and Australian two-year bond yields of 1.95 percent are below the RBA (Reserve Bank of Australia)'s 2.0 percent cash rate," said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia.
The Aussie was also stuck near six-year lows against sterling, which topped at A$2.1248 GBPAUD=R last week. CBA's Haddad forecast further pound strength as minutes of the Bank of England's (BoE) last meeting and retail sales, both due this week, should further illustrate the case for higher interest rates there.
The New Zealand dollar NZD=D4 was steady around $0.6520, dangling near a six-year low of $0.6498 touched recently in expectations of further cuts in interest rates.
Against a currency basket =NZD , it was at 69.37, near a three-year trough of 69.08 hit last week.
The currency has lost 16 percent since May as investors priced in the prospect of an aggressive easing from the Reserve Bank of New Zealand (RBNZ) given tumbling dairy prices and too-low inflation.
Market are pricing in certainty that the RBNZ will cut rates by 25 basis points to 3.0 percent at its policy meeting on Thursday, and many expect a further easing to at least 2.5 percent over time.
The near-term focus was on whether the kiwi would break through support seen around $0.6500, after the currency plummeted 3.2 percent last week.
Technical support was seen at $0.6483, where a trendline drawn from lows hit in September 2014 and February this year lays. A fall below that would open the door towards $0.6000.
New Zealand government bonds 0#NZTSY= edged up, pushing longer-dated yields 2 basis points lower. Yields on two-year paper NZ2YT=RR were their lowest since mid-2013.
Australian government bond futures were split, with the three-year bond contract YTTc1 off 2 ticks at 97.960. The 10-year contract YTCc1 rose 2.5 ticks to 97.0350, leading to a flattening of the curve. (Editing by Richard Borsuk)