The Australian and New Zealand dollars slipped on Friday and were on track for weekly losses as investors bet interest rates in the two countries will remain at record lows while the United States continues to tighten policy. The Australian dollar slipped 0.2 percent to $0.7827, not far from a 1-1/2 month trough of $0.7756 set in early February. For the week, it is down 1 percent.
The New Zealand dollar fell 0.5 percent to $0.7303, a level not seen since February 13. The kiwi has fallen in four out of the last five sessions and is set for its worst weekly showing since mid-November. The antipodean currencies have had a golden run since late 2017, largely on the back of solid investor appetite for risky assets and as the greenback stumbled to multi-year lows.
But the prospect of at least three US rate rises in 2018 has helped reverse the dollar's slide. The dollar index, which measures the greenback against a basket of currencies, is up 0.9 percent so far this week. On the other hand, the Reserve Bank of Australia (RBA) has hammered home the point that interest rates in the country were set to remain at record lows for a long time.
New Zealand government bonds were barely changed. Australian government bond futures gained, with the three-year bond contract up 2.5 ticks at 97.895. The 10-year contract inched 3.5 ticks higher to 97.1700. The policy outlook is similar in New Zealand, where the central bank has indicated a first move might not come until mid-2019. Data out on Friday showed New Zealand retail sales rose a blistering 1.7 percent last quarter as consumers spashed out on groceries and dining out.