The Australian and New Zealand dollars struggled to make any headway on Friday as investors awaited the US labour report, but seemed destined for a big weekly loss on the euro. A surprisingly strong employment outcome would likely reinforce expectations of a rate hike from the Federal Reserve in September and light a fire under the US dollar.
The Australian dollar was marking time at $0.7694, uncomfortably near a two-month low of $0.7598 hit this week. It dropped 1.3 percent on Thursday after poor retail and trade data cast doubt on the economic health of the nation.
Yet, the Aussie was still up 0.5 percent for the week. Support was found at $0.7650 with resistance at $0.7700-10. The Antipodean currencies regained some ground against the euro but were left nursing hefty losses for the week. The euro eased to A$1.4562, from a four-month peak of A$1.4712, to show a weekly gain of 1.3 percent.
Likewise, it was on track for a 1.6 percent weekly increase against the New Zealand dollar. The common currency touched a six-month high of NZ$1.5916 on Thursday to last trade at NZ$1.5694. Against the US dollar, the New Zealand dollar was a fraction higher at $0.7140, having tested 71 cents overnight under the combined effect of the firm greenback and weakness in the neighbouring Aussie dollar.
Support was found at the overnight low and near term resistance at $0.7170. "ANZ expects a solid payrolls report tonight to support the US dollar. However, this view is relatively consensus across the market, leaving positioning risks toward a lower US dollar," ANZ analysts said in a note. Australian government bond futures were mixed, with the three-year bond contract down 1 tick at 97.900. The 10-year contract was up 1.5 tick to 96.9800. The gap between 10-year and three-year yields stood at 89 basis points, from a one-year peak of 90 on Thursday.