By Gyles Beckford and Cecile Lefort
SYDNEY/WELLINGTON, March 30 (Reuters) - The Australian and New Zealand dollars were struggling against the yen on Friday as investors took profits on short yen positions for Japan's fiscal year-end amid caution ahead of key Chinese data due this weekend.
The Antipodeans, however, managed to reclaim some ground on the U.S. dollar with the Australian dollar clawing back to $1.0400, from $1.0380 in New York.
It had fallen as far as $1.0305 on Thursday, its weakest since mid-January to be down more than 3 percent this month, though it is still up for the quarter as a whole.
The NZ dollar edged up to $0.8190, from $0.8167 in NY, having bounced from $0.8117 overnight. It has dropped nearly 2 percent this month, but similarly to the Aussie, was still showing decent gains for the year.
The high beta currencies have suffered this week due to month- and quarter-end selling.
Key support for the Aussie was seen at $1.0296, the 50 percent retracement of its October-February rally.
Near-term support for the kiwi was found at the daily low just above $0.8110 and below that strongly at $0.8060, with $0.8215 the first hurdle before strong resistance at $0.8264.
Much of the pressure came against the yen where speculators went gunning for stops under 85.00 yen. That saw it slide as far as 84.55 overnight before the short sellers took profits and lifted it back to 85.27 in volatile trading.
The Aussie has shed 2 percent on the yen this month, but is still up a whopping 8 percent this year.
Fears that China's purchasing managers' index, due on Sunday, would show a slowing manufacturing sector weighed on commodity currencies. Forecasts are for a reading of 50.8, slightly under February's 51.
"Anything below 51 is probably likely to be seen as a weak number and would send the Aussie lower on Monday," said Hamish Pepper, a strategist at Barclays in Singapore.
"But, to some extent, the market will be expecting a lower number (following HSBC's Flash measure earlier this month), so there may not be quite as much reaction," he added.
Recent gains in spot prices of iron ore could help alleviate concerns of slowing demand for Australian commodities. Iron ore, a major natural resource export for the nation, rose to its highest in over five months on Friday .
Australia and New Zealand are very sensitive to news out of China, a key export market.
Speculation the Reserve Bank of Australia may cut rates from 4.25 percent next week has also been weighing on the Aussie.
Interbank futures imply around a 38 percent chance of a cut at the April 3 policy meeting, but a Reuters poll of 18 analysts found all expected rates to stay at 4.25 percent.
The market showed some caution ahead of a meeting of European financial officials to finalise the size of a euro zone bailout funds, while Spain is to reveal deep budget cuts on Friday despite stiff popular resistance.
NEW ZEALAND DOLLAR
The kiwi had the edge over the neighbouring Aussie, with investors eyeing next week's central bank rate review. See
The Aussie last sat at NZ$1.2685 , not far from the 5-1/2-month low touched Thursday.
The currency was unmoved by a dip in building approvals in February, the first in three months, as the patchy housing sector shows few signs of a concerted pick up. See
Next week, which is shortened for the Easter holiday, sees a sprinkling of second-tier data only leaving the kiwi to go with broader market momentum and events.
New Zealand government bonds followed firmer U.S.
Treasuries, with local yields as much as 5 basis points lower.
Australian debt futures extended recent gains with the three-year contract adding 0.03 points to 96.540, having touched a six-week high of 96.580. The 10-year contract added 0.025 points to 95.975, after it rose as high as 95.995, its highest since March 14.
(Australia and New Zealand bureaux)
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