The Australian and New Zealand dollars trimmed overnight gains on Friday on concerns about global growth after the US Federal Reserve decided against raising interest rates due to worries about the global economy and financial market volatility.
The Australian dollar inched up to $0.7181, having touched a four-week peak of $0.7277 when the Fed surprised some by holding rates. But the Aussie was unable to sustain the gains on worries about the health of both the US and global economies, traders said.
The Aussie suffered deeper falls against the euro and yen, but was still up for the week. The euro was down 0.7 percent for the week, while the Aussie has risen nearly 1 percent against the yen since Monday in the second consecutive week of gain.
Cushioning the Aussie were comments on the currency and local economy by the Reserve Bank of Australia (RBA) Governor Glenn Stevens at a parliamentary testimony. Stevens said the economy was growing, non-mining activity was improving, and that the exchange rate was adjusting to a change in the terms of trade. The Aussie fell below 69 cents earlier this month for the first time since 2010, tumbling around 20 cents in the past 12 months. For the week, the Aussie was up 1.4 percent, adding to last week's 2.6 percent gain. Resistance was found at $0.7230 where dealers cited stops.
The New Zealand dollar edged up to $0.6362, from $0.6357 early, having been stuck in a well-defined range of $0.6244 to $0.6446 seen so far this month. New Zealand government bonds rose, sending yields as much as 4.5 ticks lower on the long end of the curve. Australian government bond futures bounced off one-month lows, with the three-year bond contract up 7 ticks at 98.090. The 10-year contract added 9.5 ticks to 97.1950, leading to a bearish flattening of the curve.