The Australian and New Zealand dollars came off multi-week peaks on Thursday as their US counterpart staged a sharp rebound after Federal Reserve Chair Janet Yellen suggested US interest rates could rise quickly this year. The Australian dollar was sitting at $0.7500 in late morning trading as it drifted away from a two-month high of $0.7569 touched this week. It slipped 0.8 percent in the previous session, its biggest one-day drop since December 14.
Across the Tasman, the New Zealand dollar was subdued too, after skidding 1.3 percent in its biggest one-day percentage loss since November 9. The Kiwi stood at $0.7121, from a high of $0.7219 hit earlier this week. Economists at Westpac expect the Kiwi to sink to $0.6800 in the next three months due to a rallying US dollar. New Zealand government bonds slid, sending yields 12.5 basis points higher at the long end of the curve.
Australian government bond futures followed Treasuries lower, with the three-year bond contract down 5 ticks at 97.95. The 10-year contract fell 8.5 ticks to 97.20. Analysts see chart support in the $0.7465/$0.7447 zone as they remained cautious ahead of US President-elect Donald Trump's inauguration on Friday. "For AUD moves around the inauguration, it could come down to whether Trump puts more emphasis on a strong US dollar or on protectionism," said Matt Simpson, senior analyst at ThinkMarkets. "Any talk (against) a strong greenback should provide AUD/USD support, whilst protectionism and tariffs would likely weigh on commodity currencies." The US dollar, which hit a 14-year high against a basket of currencies after Trump's upset victory in November, has had a rough start to the year.