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Australia, NZ dlrs steadier as some semblance of calm returns

Published 27/06/2016, 01:08 pm
© Reuters.  Australia, NZ dlrs steadier as some semblance of calm returns
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SYDNEY/WELLINGTON, June 27 (Reuters) - The Australian and New Zealand dollars stayed defensive on Monday but without the stomach-churning volatility seen late last week after Britain stunned global markets by voting to leave the European Union.

The Australian dollar AUD=D4 hovered just above 74 U.S. cents AUD=D4 in early afternoon trade, having moved in a 3/4 cent range of $0.7385-$0.7460. On Friday, it whipsawed in a 3-1/2 cent range of $0.7305-$0.7650.

The New Zealand dollar NZD=D4 last stood at $0.7050, having also traded in a fraction of Friday's massive range of $0.6975-$0.7305.

"USD will be supported by its role as a safe haven currency amidst the uncertainty of the UK vote. Commodity currencies such as AUD, NZD and CAD will be weighed down by a firm USD," analysts at Commonwealth Bank wrote in a note to clients.

All eyes are now on a European Central Bank Forum due to begin later in the day. ECB President Mario Draghi will given a welcome address on Monday and speak on "The future of the international monetary and financial architecture" on Tuesday.

Attendees include Federal Reserve Chair Janet Yellen, People's Bank of China Governor Zhou Xiaochuan and Bank of England Governor Mark Carney. Investors are hoping for some calming words from the major central bankers.

Both Antipodean currencies held near highs against the embattled sterling. The Aussie re-tested a 19-month peak of 55.48 pence AUDGBP=R , while the kiwi came just shy of 53.00 pence NZDGBP=R , scaling heights not seen since October 2013.

"It's too early to judge that the worst is over - indeed it probably isn't over," said BNZ currency strategist Jason Wong, in a research note.

"The political turmoil in the UK that has developed over the weekend and the months of uncertainty ahead suggest that a period of subdued risk appetite is likely to develop over coming weeks, which suggests more downside potential for risk assets and the NZD," he added.

New Zealand government bonds 0#NZTSY= were a touch firmer, sending yields 2 basis points lower at the long end of the curve.

Australian government bond futures eased, with the three-year contract YTTc1 2 ticks lower at 98.530. It remained near a record high of 98.590 set on Friday.

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