By Wayne Cole

SYDNEY, June 26 (Reuters) - The Australian and New Zealand dollars were labouring under heavy weekly losses on Friday as the greenback benefited from wagers on U.S. rate hikes, while bonds were buoyed by a rapid retreat in oil prices.

The Aussie was stuck at $0.6900 AUD=D3, having shed 1.7% for the week so far. A break of the recent 11-week low at $0.6883 would likely see a test of the March trough at $0.6834, while a break above $0.6979 was needed to avert a downtrend.

The kiwi dollar stood at $0.5642 NZD=D3, after losing 1.6% for the week to hit a seven-month low of $0.56315. The next bear target is $0.5581, with resistance at $0.5681.

The greenback has been on a roll since the Federal Reserve turned surprisingly hawkish last week, leading markets to price in a 75% chance of a hike as soon as September. 0#USDIRPR

In contrast, investors have pared back expectations for a further rise in Australian rates as the reversal in oil promised to cool inflationary pressures.

While core inflation edged up in May, analysts now think inflation for the whole second quarter will undershoot the Reserve Bank of Australia's forecast of 3.8%.

"We see clear downside risks around its CPI forecasts for Q2, while the more recent, sharp decline in fuel prices could lead to lower inflation expectations from here," said Andrew Ticehurst, an analyst at Nomura.

"Accordingly, we remain of the view that the RBA's rate hike cycle is likely over."

Markets imply just a 50% chance of a further rise in the 4.35% cash rate, and are actually flirting with the prospect of rate cuts in the second half of 2027. 0#AUDIRPR

Yields on 10-year notes were down at 4.740% AU10YT=RR, having hit a near four-month trough this week.

New Zealand yields also touched four-month lows this week as investors reconsidered how far and fast rates would rise.

Markets still imply a 66% chance the Reserve Bank of New Zealand will raise its 2.25% cash rate when it meets on July 8, but now imply only two hikes this year instead of three. 0#NZDIRPR

"We have high conviction the RBNZ will deliver the first of two 25bp rate hikes in July given the unambiguously hawkish bias of RBNZ Governor Breman, and the large gap between the current cash rate and the RBNZ's neutral rate estimate of 4.0%," said Andrew Boak, an analyst at Goldman Sachs.