Australia, NZ dollars head for heavy weekly losses on yen

[SYDNEY] The Australian and New Zealand dollars edged up against their US counterpart on Friday and bounced off multi-year lows versus the yen, though they were still on track for a hefty weekly decline against the Japanese currency.

The Australian dollar rose to US$0.7390, from US$0.7364 early, having recovered from a low of US$0.7286 touched on Thursday in a volatile session.

It was up 0.2 per cent for the week and if sustained, it would be the third week of gains. The Aussie has skidded around 11 per cent this year.

The Aussie has been buffeted this week by a flare-up in global risk sentiment, particularly Britain's potential withdrawal from the European Union.

"The Aussie dollar seems to have been caught up in the whirlwind Brexit vortex," said Stephen Innes, senior trader at FX and CFD firm Oanda Australia and Asia Pacific, seeing the currency at the mercy of Britain's uncertain future in the short term.

Resistance was found at this week's peak of US$0.7450, a level tested twice. A break above would target a one-month high of US$0.7505. Key support was found around US$0.7330.

A rally in Japanese stocks helped the Antipodean currencies regain some lost ground against the safe-haven yen with the Aussie up 0.7 per cent to 77.31 yen on the day, away from a four-year trough of 75.56. Yet, it was still 2 per cent lower for the week.

The Kiwi bounced to 73.72 yen, from 72.28 touched on Thursday, a level not seen since early 2013. It has skidded 2.3 per cent this week.

The New Zealand dollar was a touch firmer at US$0.7051, from a low of US$0.6970 in the last session and was on track to end the week where it started.

"Kiwi is once again showing its resilience to the current 'risk off' environment - hardly surprising given where our interest rates sit, and given that we live in a world of almost infinite liquidity," said David Croy, ANZ senior rates strategist in a research note.

Better-than-expected gross domestic product data released on Thursday and the Federal Reserve's more dovish tone had also provided strength in the Kiwi, though analysts warned to expect more volatility in the lead up to the June 23 Brexit vote.

New Zealand government bonds gained, sending yields 1.5 basis points lower at the long end of the curve.

Australian government bond futures retreated from all-time highs touched earlier in the session, with the three-year bond contract off 6 ticks at 98.480. The 10-year contract skidded 8.5 ticks to 97.9000, while the 20-year contract dropped 7 ticks to 97.3450.

REUTERS