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SYDNEY: The Australian and New Zealand dollars were heading higher again on Friday, continuing the zig zag pattern of the week as the risk of a prolonged Russian-Ukraine conflict kept commodity prices elevated and weighed on the euro.

The Aussie stood at $0.7364, having risen 0.5% overnight. It was steady on the week, though that belied some wild swings between $0.7245 and $0.7440.

Support lies at the 200-day moving average of $0.7315, with resistance at $0.7370/80.

The kiwi dollar reached $0.6871, after gaining 0.4% overnight to again be steady on the week. It has traded between $0.6797 and $0.6926.

Much of the volatility has been driven by flows into and out of the euro, which reversed lower again overnight after the European Central Bank sounded surprisingly hawkish on policy.

“The realisation of a hawkish ECB before a slowing growth outlook and higher inflation, combined with a raging war in the Ukraine triggered a more sombre assessment of the euro’s fortunes,” said Rodrigo Catril, a senior FX strategist at NAB.

That saw the euro retreat to A$1.4942, having briefly been as high as A$1.5152.

Back home, there was much surprise in the market at news Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle had resigned to take a job in a green energy group.

Debelle was well respected by investors and the sudden change is a challenge for policy makers as they wrestle with when to start unwinding the massive stimulus of recent years.

The general assumption is that he will be replaced by a safe pair of hands from within the RBA, with the front runner considered to be the head of the economics team Luci Ellis who has been at the bank since 1991.

Futures continue to price in a first hike of the 0.1% cash rate by June, or July at the latest, with rates rising to at least 1.25% by year end.

Asked about the chance of a June move, RBA Governor Philip Lowe would not be drawn on a date saying there were reasonable scenarios where a hike could come early and where rates might not rise at all this year.

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