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SYDNEY: The Australian and New Zealand dollars failed to sustain a rally on Friday as caution prevailed ahead of the annual Jackson Hole gathering of central banks, lifting the US dollar broadly and pushing up yields.

The Aussie was pinned at $0.6414, having slid 1% overnight to just a whisker of its nine-month trough of $0.6365.

It was unable to hold above a critical level of $0.6450, in a bearish sign for the currency which has been hammered by China slowdown fears and a buoyant US dollar.

The kiwi was hurting at $0.5923, after tumbling 0.9% to as far as $0.5918.

It has support at a nine-month low of $0.5897 hit just four sessions ago and faces resistance around 60 cents.

A bout of risk-off sentiment prevailed on Thursday ahead of the much anticipated speeches by Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde at the Jackson Hole Symposium on Friday.

Wall Street gave up Nvidia euphoria, Treasuries were pressured again, while the dollar hit an 11-week top against its major peers, as traders positioned for a hawkish Powell which could deal another blow to stressed bond markets.

Two Federal Reserve officials on Thursday tentatively welcomed a jump in bond market yields, while noting they see a good chance that no more interest rate increases will be needed.

“Markets are a bit twitchy, (they could be) just repositioning ahead of Jackson Hole, worried that Powell may pull out another rabbit out of the hat”, said David de Garis, a senior economist at National Australia Bank.

“There is just some renewed appetite for the US dollar.”

Australia’s three-year bond yields rose 3 basis points to 3.856%, and 10-year bond yields climbed by a similar margin to 4.127%.

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