The Australian and New Zealand dollars held steady on Friday as firm commodity prices and demand against the yen helped stave off pressure from their US counterpart. The Australian dollar was holding around $0.7410, pretty much where it started the week. Data on Friday showed retail sales beat market forecasts to rise 0.5 percent in October, a welcome relief after a run of disappointing figures this week suggested the economy had all but stalled in the third quarter.
The Aussie has support at $0.7370 with chart resistance at 75 US cents, a level it failed to break three times this week. The Aussie held strong on the yen at 84.47 after gaining for three straight days. It has been underpinned by carry trade demand, where investors borrow at low rates in yen to buy higher yielding assets. The New Zealand dollar rose 0.1 percent to $0.7093 on Friday. It was on track to end the week 0.7 percent higher for its second straight weekly gain. Against the Australian dollar, it was little changed at A$1.0449.
"AUD/NZD continues to confuse. As the past five weeks have produced opposite directions at the close, we can safely say the markets remain undecided to the direction of the next major move," said Matt Simpson, senior analyst at ThinkMarkets. Simpson sees key chart support at A$1.041. New Zealand government bonds slipped, with yields rising seven ticks across the curve.
Australian government bond futures dropped, with the three-year bond contract down 5 ticks at 98.00. The 10-year contract fell 8 ticks to 97.1700. "The RBA is likely to be encouraged by these recent trends, leaving the Bank comfortably on hold for the time being," said Ivan Colhoun, chief economist at National Australia Bank.