SYDNEY/WELLINGTON, June 28 (Reuters) - The Australian and New Zealand dollars hit fresh multi-month highs on the euro on Thursday just ahead of a crucial EU summit, while a short squeeze helped drive the Aussie to a one-week high on the greenback. Market is very thin with investors reluctant to do much ahead of the summit, as well as month and quarter end. Expectations of a breakthrough are already very low, meaning any positive surprise could fuel risk trades, traders say.
Euro slips to four-month lows vs the Aussie and kiwi, reaching A$1.2331 and NZ$1.5701 , down about 0.2 pct on the day. Lack of progress in resolving the euro zone debt crisis could push the single currency towards lifetime lows around A$1.2124 and NZ$1.5575 set early in the year. The Aussie also up on the greenback on talk that a buy order from a U.S. name triggered stops in a thin market. That swept the Aussie to a session high of $1.0121 vs $1.0077 late in NY. Last at $1.0114. Aussie now eyes resistance at $1.0128, the 61.8 pct retracement of its June 20-25 fall, with talk of more stops above. The New Zealand dollar hits a session high of $0.7955, up 0.3 pct on the day, on track to end the month more than 5 pct higher. Resistance seen at $0.7945, its 200-day moving average. A clean break above is needed to move significantly higher in the near term. Previous attempt earlier this month failed. New Zealand monthly business survey shows weaker sentiment among domestic businesses this month. Although firms remain broadly positive about the economy, fewer are expecting an improvement over the next year. Antipodean currencies steady on the yen, with Aussie buying 80.37 , and kiwi fetching 63.09. Investors eye brewing political rift within the Japanese ruling party. New Zealand government bonds trade slightly lower on the day, prodding yields 2 basis points higher across the curve. Australian government bond futures shade easier, with the three-year contract down 0.03 points at 97.640 and the 10-year also 0.03 points lower at 97.005.
(Australia/New Zealand bureaux)
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