Australia, NZ dollars catch a breather ahead of Fed conference

Australia, NZ dollars catch a breather ahead of Fed conference

SYDNEY, Aug 25 (Reuters) - The Australian and New Zealand dollars were trying to pick up on Thursday as a buoyant greenback paused for breath amid caution ahead of the U.S. Federal Reserve's Jackson Hole conference this week.

The Aussie AUD= rose 0.3% on Thursday to $0.6929, after easing 0.3% overnight to as low as $0.6877, although it failed to breach its recent major support level of around $0.6860.

The New Zealand dollar NZD= nudged up 0.2% at $0.6200, having lost 0.4% overnight. It has support at the recent one-month low of $0.6157.

However, investors are expected to focus again on risks to both currencies when the spotlight shifts back to the Fed's aggressive path of interest rate hikes, a slowing global economy and the war in Ukraine.

"The domestic data calendar is empty until next week when we see the release retail trade, building approvals, private sector credit and some of the building blocks for the Q2 22 national accounts," said analysts at Commonwealth Bank of Australia.

"A worsening in risk sentiment and a stronger USD can push AUD/USD lower."

Investors and traders await the Jackson Hole symposium that begins on Thursday, with remarks from Fed Chair Jerome Powell on Friday potentially providing clues about the pace of future rate hikes and whether the central bank can achieve a "soft landing" for the economy.

Traders of fed fund futures last priced in a 60.5% chance that the central bank will raise rates by 75 basis points next month, and a 39.5% probability of a 50-basis point increase.

Following a jump in U.S. Treasury yields overnight, Australian government bond futures saw yields rising to the highest since late June.

The 10-year yield AU10YT=RR rose to 3.703%, up over 6 basis points from the previous close, while the three-year yield AU3YT=RR jumped to 3.342%, compared with the previous close of 3.288%.
Reporting by Stella Qiu; Editing by Sam Holmes