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NZ, Australia dlrs poised for large weekly gains as central banks help

Published 10/06/2016, 01:24 pm
Updated 10/06/2016, 01:30 pm
NZ, Australia dlrs poised for large weekly gains as central banks help
AUD/USD
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NZD/USD
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AU10YT=RR
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By Cecile Lefort and Rebecca Howard

SYDNEY/WELLINGTON, June 10 (Reuters) - The New Zealand and Australian dollars edged off highs on Friday on growing jitters over the upcoming Brexit vote, though both currencies were on track for hefty weekly increases.

The New Zealand dollar NZD=D4 nudged down to $0.7104, from $0.7135 early. It climbed to a one-year peak of $0.7148 on Thursday after the central bank held rates at a record low of 2.25 percent and appeared less dovish than the market was expecting.

It has jumped more than 2 percent so far this week against most currencies.

"The NZD has been the star performer, following the RBNZ's Monetary Policy Statement," said BNZ FX Strategist Jason Wong.

"The market's take was that NZ's high interest rate premium to the rest of the world would be maintained and that was a good reason to buy the NZD," said Wong.

The market trimmed the risk of an easing to 2.03 percent by November, from 2.01 percent before the policy review and is no longer fully priced for a cut.

The euro plumbed its lowest since early January at NZ$1.5836 EURNZD=R . It was last at NZ$1.5908, having skidded 2.6 percent this week.

The kiwi even outpaced a broadly healthy Australian dollar which slipped to a 13-month low of NZ$1.0407 AUDNZD=R on Thursday. It has steadied to NZ$1.0439, but was still on track for a weekly fall of 1.4 percent.

Elsewhere, the Australian dollar AUD=D4 marked time at $0.7412, having been repelled by a wall of resistance ahead of $0.7515 on Thursday. It was still up for a second consecutive week with a gain of 0.6 percent.

Dealers said the Aussie was likely to consolidate around the 74 cents ahead of an Australian public holiday on Monday.

The Aussie has powered up more than 1 percent this week against the euro, yen and pound.

The bounce came after the Reserve Bank of Australia (RBA) wrong-footed doves with the omission of a clear easing bias in its monthly policy review statement.

The RBA on Tuesday kept rates at a record low of 1.75 percent, taking a pause after last month's cut and recent data showing reasonable strength in the economy.

In the bond market, growing concerns about Britain's looming referendum and global growth made investors look for safe-haven assets.

New Zealand government bonds 0#NZTSY= gained, sending yields 3 basis points lower at the short end and 3.5 basis points lower at the long end.

Australian 10-year cash yields AU10YT=RR touched an all-time low of 2.1 percent. They reached 2.6 percent late April.

Australian government futures ran into profit-taking following recent hefty gains with the three-year contract YTTc1 off 3 ticks at 98.420.

The 10-year contract YTCc1 shed 1.25 ticks to 97.8950, having climbed to a fresh record peak of 97.9150. The 20-year contract YXXc1 was 0.75 ticks softer at 97.3025.

(Editing by Simon Cameron-Moore)

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