Australia, NZ dollars sink on soaring euro; steady vs dollar

SINGAPORE, March 12 (Reuters) - The Australian and New Zealand dollars hit post-COVID lows against a surging euro, as Ukraine said it would agree to a U.S. proposal for a ceasefire, a possible step toward peace.

The common currency rose to A$1.7418 EURAUD= overnight, its highest since April 2020, and NZ$1.9167 EURNZD=, the highest since March 2020.

The euro had gained broadly after the U.S. said it would restore military aid and intelligence sharing to Kyiv, while Kyiv said it would accept a U.S. ceasefire proposal.

Russia has yet to respond.

Against the U.S. dollar the typically risk-sensitive Antipodeans have been trading sideways while markets are caught between risk aversion, as U.S. stocks sink, and a weakening U.S. dollar driven by fears of a U.S. slowdown.

The kiwi NZD=D3 hovered around $0.57 on Wednesday and the Aussie AUD=D3 was parked just below $0.63. Strategists at Westpac said falling U.S. yields and a seeming lack of support for the greenback could put a floor under the Aussie, for now.

"Beyond the short-term headlines, we see a more constructive multi-week backdrop developing for AUD," said Richard Franulovich, the bank's head of foreign exchange strategy.

"U.S. exceptionalism remains heavily wounded by policy reversals and chaotic policymaking, keeping U.S. policy uncertainty high. AUD-USD yield spreads continue to grind slowly further in AUD's favour, helping keep AUD/USD in a low-key, albeit wide-channeled, mild uptrend."

In a separate piece of research, Franulovich also noted that the Aussie's sensitivity to moves in U.S. stocks is at a post-COVID low.

"The S&P 500 is down 9% from its highs, but AUD/USD is down barely 2% over the same period," he said.

"Admittedly ... a discontinuous breakdown in equities will weigh on AUD/USD, but possibly not as much as in the past," he said, since Australia's net offshore equity holdings have almost tripled since 2022 and muddy the implications of any sell-off.

In the rates market, Aussie bonds tracked selling in the U.S., with 10-year yields AU10YT=RR up eight basis points to 4.455% in the cash market and futures YTTc1 down eight ticks.