By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Feb 19 (Reuters) - The Australian and New Zealand dollars fell on Friday as concerns about global growth sent investors to the safety of the yen and government bonds, but the currencies were still on track for sharp weekly gains against the euro and pound.
The Australian dollar AUD=D4 fell to $0.7100, from $0.7158 early, away from a peak of $0.7187 touched on Wednesday. It was poised to end the week where it started and still well above a seven-year trough of $0.6828 last month. Support was found around $0.7080.
Weighing on the Aussie was a story by the Wall Street Journal quoting a Reserve Bank of Australia board member saying the Australian dollar was still too high.
While the central bank has stopped actively talking down the currency, governor Glenn Stevens recently seemed to suggest the currency could fall further. He noted the Aussie had been relatively steady, even though commodity prices have fallen.
The Aussie was dragged lower by renewed appetite for the yen following a pause in an oil rally. The Aussie dropped 0.8 percent on the day to 80.37 yen AUDJPY=R , having erased all this week's gains. Likewise, the kiwi fell to 74.80 NZDJPY=R and was set to post its third consecutive week of losses.
But the Antipodeans stood tall against the euro and pound, showing a weekly jump of more than 1 percent.
The New Zealand dollar NZD=D4 eased to $0.6615 and was likely to end the week staying on the sidelines, according to ANZ Bank.
The Kiwi got a lift Thursday but failed to hold its gains overnight. With little domestic data on the near-term horizon, investors will remain focused offshore for direction.
ANZ notes that modest improvement in U.S. data overnight had done little to drive a quick reversal of recent US worries, but equally had not given cause for concern. "We expect that trend to continue with markets watching U.S. CPI tonight," it adds.
New Zealand government bonds 0#NZTSY= gained slightly, sending yields 4 bps higher across most of the curve.
Australian government bond futures jumped, with the three-year bond contract YTTc1 6 ticks higher at 98.220. The 10-year contract YTCc1 leapt 10.5 ticks to 97.5650, while the 20-year contract YXXc1 also added 10.5 ticks to 97.0350.
The spread between 10- and 3-year government bonds AU3YT=RR AU10YT=RR shrunk to 65 basis points, near 64 basis points, the smallest in 10 months. (Editing by Simon Cameron-Moore)