WELLINGTON/SYDNEY: The Australian and New Zealand dollars slipped against the yen on Friday as investors found little comfort in a tentative bounce in Japanese stocks, but both Antipodean currencies were on track to snap a string of weekly losses versus the greenback.
Trading on the last day of the week was marked by caution surrounding the volatile Nikkei, which is keeping a squeeze on short-yen positions that is underpinning the Japanese currency.
Both the Aussie and kiwi fell about 0.6 percent on the yen to 91.32 and 76.71 respectively, having earlier slid more than 1 percent. The Aussie remained not far from a 5-1/2 month low of 88.90 yen plumbed on Thursday.
Against the greenback, the Aussie slipped 0.6 percent on the day to $0.9592, but it remained well off a 33-month trough of $0.9325 plumbed on Tuesday. It is up 0.8 percent so far this week, snapping five straight weeks of losses.
The kiwi shed 0.5 percent to $0.8058, but held well above a one-year low of $0.7761 set earlier in the week. That left it on track to post a 2-plus percent gain for the week in its best performance in a year.
Both Antipodean currencies have been hit hard in recent weeks by worries about slower growth in China, a key export market, and uncertainty about when the Federal Reserve will start to scale back its massive stimulus programme.
"To a large extent the recent weakness in AUD and NZD can be attributed to the pressure being seen on 'carry trades' more broadly as the market moves to price an earlier and swifter Fed tapering of their bond purchases," said John Horner, strategist at Deutsche Bank.
"Whether the statement accompanying the FOMC announcement and ensuing press conference by Chairman Bernanke on Wednesday pushes back on these expectations, will be critical then for the near-term AUD and NZD outlook," he said, referring to the Fed's June 18-19 policy meeting.
HSBC's flash report on China's manufacturing activity due on June 20 will also be closely watched, traders said. Any disappointment there will no doubt give investors more ammunition to shoot at the Antipodeans.
For now, buying interest for the Aussie is seen below $0.9400, with chart support around the 33-month trough of $0.9325 set earlier this week. Initial resistance is around $0.9730, the 38.2 percent retracement of its April 30-June 11 slide.
Australian bond futures saw little action on Friday with the 3-year contract 0.02 points lower at 97.405 and the 10-year contract down 0.005 points at 96.600.
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