By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Jan 6 (Reuters) - The Australian and New Zealand dollars skidded to multi-week lows against their U.S. counterpart and the yen on Wednesday in the face of Chinese growth concerns and sliding commodity prices.
The Australian dollar fell around half a U.S. cent to $0.7112, pulling closer to the December trough of $0.7097. A break could open the way to $0.7016, and then to a six-year low of $0.6892.
The latest blow came after China's central bank fixed its yuan currency lower than many expected, reviving talk it was aiming for a sustained depreciation to boost exports.
Adding insult to injury, a survey showed a slowdown in China's services sector.
China is a key export market for Australia and the Aussie is often used by investors as a liquid proxy for trading the yuan.
News an earthquake in North Korea was likely to be a nuclear test explosion further dulled risk appetites.
The Aussie had been on the ropes earlier in the week after a global selloff in equities sparked a rush into safe-haven assets like government bonds and yen.
Not helping sentiment was the sudden halt of a rally in iron ore, Australia's top export earner. Prices of the mineral .IO62-CNI=SI skidded 2.3 percent on Tuesday, having dropped 60 percent in the past 12 months.
All of that gave a springboard to the safe-haven yen, which rose more than 1 percent against the Antipodean currencies. The Aussie fell to three-month lows at 84.25 yen AUDJPY=R , while the kiwi dropped to 78.64 yen.
Against its U.S. peer, the New Zealand dollar NZD=D4 fell more than 1 percent to $0.6639, having dropped more than two cents in one week.
A global dairy auction disappointed markets after GlobalDairyTrade's headline price index fell 1.6 percent with whole milk powder prices down 4.4 percent.
Westpac Bank Senior Economist Anne Boniface said weaker prices would make it more challenging for dairy giant Fonterra to meet its forecast payout for its farmer shareholders, adding to pressure on the economy.
New Zealand government bonds gained, sending yields 3.5 to 4.0 basis points lower across the curve.
Australian government bond futures also rose, with the three-year bond contract up 2 ticks at 98.020. The 10-year contract rose 4.5 ticks to 97.2350 in a bullish flattening of the curve. The 20-year contract added 5.5 ticks to 96.7550.