SYDNEY, Feb 24 (Reuters) - The Australian and New Zealand dollars took a step back on Thursday as warnings of an imminent Russian invasion of Ukraine slugged global share markets and soured risk sentiment.
The Aussie eased 0.35% to $0.7206 , having briefly touched a five-week peak of $0.7284 overnight. The risk was now for a pullback toward $0.7165, though surging commodity prices were providing some support.
The kiwi dollar faded to $0.6745 , after also making a five-week top of $0.6808 overnight. Support lies around $0.6730 and $0.6685.
Markets were roiled when U.S. Secretary of State Antony Blinken said he believed Russia would invade Ukraine within hours, while airlines were advised to stop flying over Ukraine airspace.
While the risk of conflict has pushed up prices for some of Australia's major resource exports, that will also be a drag on global growth and investment.
"Ultimately, the Aussie would suffer more from such a massive deterioration in risk sentiment than it could ever gain from higher energy prices," said Ray Attrill, head of FX strategy at NAB.
"After all, commodities rose pretty much all last year and the Aussie got less than nothing out of that."
The Reserve Bank of Australia's (RBA) index of commodity prices climbed 29% over 2021, but the Aussie's trade weighed index still fell 3.6%.
Geopolitical uncertainty did provide some slight relief for Australian bonds, with 10-year yields easing back to 2.21% from a three-year peak of 2.301%.
Investors have also been trimming wagers on an RBA rate hike as early as June, after wage data out on Wednesday failed to meet the market's hawkish expectations.
Data out Thursday showed business investment rose 1.1% in the December quarter, missing forecasts, though a strong GDP still looks likely given booming consumer demand.
Across the Tasman, debt markets were still reeling from a hyper-hawkish policy outlook from the Reserve Bank of New Zealand (RBNZ) which projected rates could treble over the next couple of years to around 3.35%.
Two-year swap rates rose further to 2.745% on Thursday, having already surged 10 basis points on Wednesday.
"We continue to expect the RBNZ to hike the cash rate at each meeting in 2022 taking it to 2.50% by November," said Jarrod Kerr, chief economist at Kiwibank. "We have, however, added two more rate hikes to 3% in 2023."
"The more aggressive approach is likely to accelerate the decline in house prices as interest rates are ratcheted higher, faster."
Reporting by Wayne Cole; Editing by Christopher Cushing