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SYDNEY: The Australian and New Zealand dollars didn’t stray far from key support levels on Tuesday ahead of the Federal Reserve’s Jackson Hole symposium later this week, while local yields hit a nine-year high in tandem with a bond sell-off globally.

The Aussie was little changed at $0.6413, having been rangebound between $0.6388 and $0.6421 overnight.

China’s faltering economic recovery, a strong US dollar and expectations that the Reserve Bank of Australia is done with interest rate hikes have sent the Aussie reeling.

It hit a nine-month trough of $0.6365 last week, where it continues to find strong support, and has lost 11% from a peak in February. For any meaningful rebound, it would need to clear $0.6450.

The kiwi dollar was hovering at $0.5929, after bouncing off a fresh nine-month trough of $0.5897 overnight and finishing largely flat. It has lost 10% from a peak in February.

Earlier in the day, a rebound in the offshore yuan, spurred by a much firmer-than-expected fixing by China’s central bank, helped the two currencies briefly nudge higher but the yuan soon lost those gains.

The Antipodean currencies often function as a liquid proxy for the yuan, owing to the region’s exports to China.

Given the bearish trend, analysts at National Australia Bank on Tuesday cut their forecast for the Australian dollar to 66 cents by the end of the year, from an earlier estimate of 72 cents.

“While we acknowledge 0.60 as a downside risk, we’d anticipate a significant step up in local investor hedging around this level, if seen, limiting chances of a sustained break,” said Ray Attrill, head of FX strategy at NAB.

Traders are looking ahead to a speech from Fed Chair Jerome Powell on Friday for clues about how long interest rates will have to stay high.

The benchmark US 10-year Treasury yield scaled a fresh 16-year high.

The ten-year Australian bond yield hit a fresh nine-year high of 4.327% on Tuesday, leaving the spread with US Treasuries at a negative 4 basis points.

Australian two-year notes now pay 105 basis points less than Treasuries, the widest since May.

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