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Australia, New Zealand dollars sag to multi-week lows on strong greenback

Reuters logo Reuters 10/03/2017 Swati Pandey and Tom Westbrook

Reserve Bank of New Zealand dollar notes are pictured in Singapore © REUTERS/Dennis Owen/File Photo Reserve Bank of New Zealand dollar notes are pictured in Singapore The Australian and New Zealand dollars stayed near two-month lows on Friday, on track for their second straight weekly loss on broad greenback strength.

Bonds were also under pressure as expectations of a U.S. rate hike next week battered Treasuries. Yields on Australian 10-year paper (AU10YT=RR) jumped to their highest since late 2015 at 2.98 percent, up 24 basis points in just two weeks.

The Australian dollar (AUD=D4) held at $0.7519, up 0.24 percent, after touching a trough of $0.7491 overnight. It was on track to fall 1 percent for the week.

After gaining in the first two months of 2017, the Aussie has fallen 1.8 percent in March, largely due to a resurgent U.S. dollar.

The New Zealand dollar (NZD=D4), which fell the past seven sessions, edged 0.25 percent higher to $0.6909. It was set to post a 2 percent loss for the week.

The kiwi has had a particularly trying March, down about 4 percent.

In comparison, the U.S. dollar has climbed 0.8 percent against a basket of global currencies (.DXY) as markets priced in a U.S. Federal Reserve rate hike at its March 14-15 meeting.

"Since the local close yesterday, the NZD has been trading in a tight range around the $0.69 mark... the fact that the currency has spent the last 12 hours without falling feels like a 'win'," Bank of New Zealand currency strategist Jason Wong said in a research note.

The kiwi took a hit this week after a fortnightly dairy auction showed milk prices had suffered heavy losses, raising doubts about a recovery in the country's No. 1 export.

Soft sales and manufacturing data during the week caused more downward momentum.

Investors now await U.S. jobs data due later on Friday which should reinforce expectations of a Fed hike next week.

Markets are pricing in more than a 90 percent chance of an increase after a surprisingly robust private U.S. jobs report out earlier in the week.

New Zealand government bonds (0#NZTSY=) eased, sending yields four basis points higher.

Australian government bond futures slipped too, with the three-year bond contract (YTTc1) down 3 ticks at 97.815. The 10-year contract (YTCc1) was off 4.25 ticks at 96.9975

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