By Cecile Lefort
WELLINGTON, Sept 18 (Reuters) - The Australian and New Zealand dollars trimmed overnight gains on Friday on concerns about global growth after the U.S. Federal Reserve decided against raising interest rates due to worries about the global economy and financial market volatility.
The Australian dollar AUD=D4 inched up to $0.7181, having touched a four-week peak of $0.7277 when the Fed surprised some by holding rates. But the Aussie was unable to sustain the gains on worries about the health of both the U.S. and global economies, traders said.
The Aussie suffered deeper falls against the euro and yen, but was still up for the week. The euro was down 0.7 percent for the week, while the Aussie has risen nearly 1 percent against the yen since Monday in the second consecutive week of gain.
Cushioning the Aussie were comments on the currency and local economy by the Reserve Bank of Australia (RBA) Governor Glenn Stevens at a parliamentary testimony. Stevens said the economy was growing, non-mining activity was improving, and that the exchange rate was adjusting to a change in the terms of trade.
"The RBA appeared very comfortable with the level of interest rates and the exchange rate this time," said Annette Beacher, chief Asia-Pacific macro strategist at TD Securities.
"On several occasions he was asked about the AUD fall, and the Governor said it was in line with fundamentals, and welcome."
The Aussie fell below 69 cents earlier this month for the first time since 2010, tumbling around 20 cents in the past 12 months.
Its decline should give much-needed support to Australian exports as the economy shifts from a mining investment boom to other sectors.
For the week, the Aussie was up 1.4 percent, adding to last week's 2.6 percent gain. Resistance was found at $0.7230 where dealers cited stops.
The New Zealand dollar NZD=D4 edged up to $0.6362, from $0.6357 early, having been stuck in a well-defined range of $0.6244 to $0.6446 seen so far this month.
It briefly popped to a three-week peak of $0.6446 but ran out of puff after the Fed highlighted uncertainties around global growth. The kiwi was still on track for a 0.7 percent gain, pulling away from a six-year trough below 62 cents touched last month.
New Zealand government bonds rose, sending yields as much as 4.5 ticks lower on the long end of the curve.
Australian government bond futures bounced off one-month lows, with the three-year bond contract up 7 ticks at 98.090. The 10-year contract added 9.5 ticks to 97.1950, leading to a bearish flattening of the curve.