Australian, NZ dollars set for first weekly gain in seven, but bearish trend persists

SYDNEY, Jan 17 (Reuters) - The Australian and New Zealand dollars are on track for their first weekly gain in seven on Friday, but recent price movements have been lacklustre, indicating that near-term risks remain tilted to the downside.

The two also weakened against the Japanese yen, which gained broadly as markets ramped up expectations of an interest rate hike from the Bank of Japan next week.

The Aussie was flat at $0.6207 AUD=D3, having coiled near a resistance level of $0.6250 overnight and ended 0.2% lower. The currency found little relief in lower U.S. yields overnight, which pressured the dollar broadly, while a surprisingly strong local jobs report also failed to provide any support.

The Aussie has strengthened 1% so far this week, rising from five-year lows, due to a tame U.S. consumer price reading that eased the bearish pressure on bonds and pulled down the dollar.

The kiwi was holding at $0.5609 NZD=D3 after slipping 0.1% overnight. For the week, the unit has gained 1%, recovering from two-year lows.

"Major fundamentals and even some technical indicators are suggesting the AUD/USD is primed for a rebound. But the known unknown is the uncertainty around Trump tariff policy, especially on China," said Rodrigo Catril, senior FX strategist at the National Australia Bank.

"And the PBoC may be forced to allow the CNY to rise beyond the 7.50 area. Together a bad combo for the AUD as well as other pro-growth FX pairs."

The two antipodeans were also unchanged after data from China showed that its economy grew at a faster-than-expected clip of 5.4% in the fourth quarter. That helped elevated the 2024 growth rate to 5%, in line with Beijing's target.

Against the Japanese yen, the Aussie fetched 96.39 yen AUDJPY=RR, down 1% overnight, while the kiwi traded at 87.06 yen NZDJPY=RR, also falling 1% overnight.

The local bond market had some wild sessions, but managed to finish the week largely unchanged. Three-year Australian government bond yield AU3YT=RR held at 3.937%, flat for the week, while ten-year yield AU10YT=RR was down 3 basis points in the week to 4.488%.

Swaps were still implying around a 70% chance that the Reserve Bank of Australia will cut its 4.35% cash rate by 25 basis points when it meets on Feb. 18, despite the strong jobs figures on Thursday. 0#AUDIRPR

(Reporting by Stella Qiu; Editing by Sherry Jacob-Phillips)

((yifan.qiu@thomsonreuters.com))