SYDNEY, July 21 (Reuters) - The Australian and New Zealand dollars were nursing sizable weekly losses on Friday as markets braced for higher interest rates in the U.S. and Europe, while also narrowing the odds of another hike at home.
The Aussie was struggling at $0.6770, having lost 1.1% for the week so far to test support around $0.6750. Its repeated failure to break resistance at $0.6900 also risks a pullback as far as $0.6600.
The kiwi dollar was in even worse shape at $0.6223 , having fallen 2.2% for the week, away from a recent top of $0.6412 marked last Friday.
The Aussie got a tiny lift from China's efforts to stabilise its currency, given the Aussie is often sold as a liquid proxy when the yuan is under pressure.
But was unable to gain much more due to jitters ahead of an expected hike in U.S. interest rates next week, with upbeat jobs data leading markets to price in a greater risk of a further rise by November.
The European Central Bank is considered certain to hike at its meeting next week, and leave the door open to further tightening.
Strong employment data at home has also seen investors price in more risk that the Reserve Bank of Australia (RBA) will raise rates in August. Futures now imply a 50% chance of a quarter point rise, compared to 25% just a day ago.
"We continue to anticipate a 25bp hike and think that a notably below-consensus CPI report is the only thing that could knock this off course," said Nomura economist Andrew Ticehurst.
The consumer price index for the June quarter is due next Wednesday and headline inflation is seen slowing to around 6.2%, from 7.0%, with core dropping to 6.0%, from 6.6%.
"We think that most of the local fundamentals support a higher AUD, including our expectation for an August hike and continuing strong trade and current account surpluses," added Ticehurst.
"AUD also appears somewhat undervalued relative to current commodity prices and rate differentials."
Prices for iron ore, Australia's biggest export earner, have jumped on speculation Beijing is planning more support for property construction. (Reporting by Wayne Cole; Editing by Edwina Gibbs)
