SYDNEY/WELLINGTON, July 7 (Reuters) - The Australian dollar quickly bounced back above 75 U.S. cents on Thursday after initially wilting on news that Standard & Poor's had cut its outlook on the country's top-notch AAA credit rating to negative from stable.
Traders said the Aussie's resilience was not a surprise, given its relative appeal in a post-Brexit world where both sterling and the euro have fallen out of favour.
Growing expectations the Federal Reserve will hold back from raising rates for years have also dimmed the allure of the greenback. Australian bonds barely budged as 10-year yields of 1.88 percent make the debt highly attractive compared to the negative yields of some of its peers.
The Aussie last stood at $0.7513 AUD=D4 , barely changed on the day, having recovered from a slide to $0.7467 after S&P warned it could cut Australia's rating within two years. do not believe S&P's change in view will be a trigger for a sustained down-leg in AUD/USD. After all, the Australian government's rating has not been cut, merely the risk of a cut to the rating in the next two years has increased to one in three," said Joseph Capurso, strategist at Commonwealth Bank.
At 75 cents, the Aussie was also back at levels seen before Britain shocked the world by voting on June 23 to leave the European Union.
Against the kiwi, it was flat at NZ$1.0519 AUDNZD=R , continuing to recover from a one-year low of NZ$1.0371 set on Monday.
The New Zealand dollar NZD=D4 held firm at $0.7144, helped by a slightly weaker U.S. dollar.
Investors are awaiting a speech by Reserve Bank of New Zealand Deputy Governor Grant Spencer on macro-prudential policy and housing market risk.
"Traders will be looking for a clear policy and timing to open the door for further rate cuts as low inflation lingers," said OM Financial Ltd Private Client Manager Stuart Ive. Failure to deliver will weigh on the kiwi, said Ive.
Spencer is due to speak around 0530 GMT.
New Zealand government bonds 0#NZTSY= eased, sending yields around 2 basis points higher across the curve.
Australian government bond futures were just a shade softer a day after they raced to record highs.
The three-year bond contract YTTc1 was one tick lower at 98.550, but still not far from the all-time peak of 98.600. The 10-year contract YTCc1 edged down 0.25 ticks to 98.1050.