The Australian and New Zealand dollars were ending a tough week with a modest bounce on Friday as speculators took profits on long US dollar positions ahead of the closely watched payrolls report later in the session. The Aussie dollar had edged up to $0.7552, after bouncing 0.5 percent overnight, taking it away from an 11-month trough around $0.7472 struck earlier in the week.
The kiwi dollar was steady for the moment at $0.7038, having touched a four-month low of $0.6985 mid-week. Both currencies have been steamrolled by their US counterpart in recent weeks as the relative outperformance of the US economy argued for more hikes in interest rates there and pushed up Treasury yields. New Zealand government bonds gained, sending yields 3 basis points lower at the long end of the curve
Australian government bond futures edged higher, in part due to rallies in European bonds as inflation data there proved surprisingly soft. The three-year bond contract added 1 tick to 97.775, while the 10-year contract rose 2 ticks to 97.1950. In contrast, investors see scant chances of a rise in interest rates in Australia or New Zealand anytime soon.
The Reserve Bank of Australia (RBA) reiterated the steady message in its quarterly economic outlook on Friday, saying that while a hike might be appropriate at some point here was no near-term case for a move. "It looks like the RBA will continue to sit on the sideline over 2018," said CBA senior economist Gareth Aird.
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