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SYDNEY: The Australian and New Zealand dollars turned hesitant on Friday amid fears Russia was about to invade Ukraine, though the pullback was limited and bonds won a break from recent selling pressure.

The Aussie eased to $0.7184, from Thursday’s top of $0.7217, but was still up 0.7% for the week in a resilient performance given the volatility of global markets.

Support lies at $0.7158 and $0.7100, with resistance up at last week’s high of $0.7248 and then $0.7275.

The kiwi dollar was flat at $0.6688, having reached as high as $0.6716 overnight. That left it 0.5% firmer for the week, with major support at $0.6593 and resistance around $0.6733.

A slide in world equity markets helped bonds rally, with yields on Australian 10-year debt easing to 2.187% from a three-year top of 2.26%.

New Zealand three-year swaps edged back to 2.51% having hit their highest since 2016 this week as markets priced in the risk of more aggressive rate hikes.

The Reserve Bank of New Zealand (RBNZ) is considered certain to raise rates by a quarter point to 1.0% next week, and swaps imply a one-in-three chance it might even move by 50 basis points.

The central bank is also likely to raise its projected path for rates over the next couple of years, quite possibly tipping a top of 3.0% or more.

Michael Gordon, acting chief NZ economist for Westpac, thinks the RBNZ will settles for a quarter-point move in part because a red hot housing market is cooling rapidly.

“Mortgage rates have already risen in anticipation of rate hikes, and this is clearly having the desired effect on the housing market,” he said. “The RBNZ doesn’t need to step up the pace to get results.”

Strength in commodity prices remains a support to the Aussie, though iron ore has recoiled sharply this week as Beijing stepped up efforts to restrain the steel-making mineral.

Analysts at ANZ noted that inventories of many resources were near record lows just as manufacturers were looking to build up stocks in response to the supply disruptions of the past couple of years.

That, combined with predictions of solid global growth this year, meant resources could weather higher interest rates.

“Commodities tend to perform well when interest rates are rising,” they said in a note “In the five rate-hike cycles of the past 50 years, the Bloomberg Commodity Total Return index recorded a median annualised return of 17.3%.”

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