A$ off lows on Fed QE commitment, pressured by yen

The Antipodean currencies remained under pressure against the yen as the fallout from Italy's deadlocked election triggered a huge fall in euro/yen, which spilled over into other crosses.

The New Zealand dollar underperformed with a 1 pct drop to a near two-month low of $0.8223. The kiwi has been a popular trade in recent weeks leaving the market long and vulnerable to a setback.

The Aussie trades at $1.0235, trimming losses after it slid as low as $1.0200, its weakest since October.

Investors buy back the Australian currency after Fed Chairman Ben Bernanke sought to reassure the US Congress of the benefits of its bond-buying programmed.

Aussie had fallen the previous day on Italian political uncertainty the country's parties looked for a way to govern the after none achieved a majority in parliamentary elections, raising concerns about the country's stability..

Aussie at 94.00 yen, having fallen as far as 93.07 at one point. Kiwi down at 75.76 yen, after getting as low as 75.21.

Market participants expect Antipodeans will face more selling pressure if the political deadlock in Italy continues, while the inability of US lawmakers to agree on spending cuts before a looming deadline may also trigger more risk aversion.

Locally, investors await Australian data on construction work, along with New Zealand trade and migration figures.

Trading volumes in Aussie & kiwi surged to their highest hourly levels this year during the sell-off, suggesting speculators scrambled to cut back a hefty pile-up in bets to buy both currencies in past months.

Aussie keeps most of its recent gains on the euro at A$1.2761. Early this month the euro had been as high as A$1.3189.

Kiwi's broad underperformance is highlighted by a jump in the Aussie to a three-week high of NZ$1.2420.

Traders said the kiwi's losses accelerated after it broke below support at $0.8280, a low hit in January. Its break below its 100-DMA at $0.8294 also suggests a risk of more selling. Support seen around $0.8150, the 200-DMA.

Australian government bonds little changed, with the three-year contract indicated flat at 97.260, while the 10-year contract edges up 0.010 points to 96.655.

New Zealand government bonds largely flat in early trade.