The Australian and New Zealand dollars were under pressure on Friday as a fresh bout of risk aversion gripped market, in part due to concerns about a global trade war and rapid-fire changes in top White House staff. The Aussie dollar slipped further to $0.7784, after shedding 1 percent overnight, a major turnaround from a $0.7916 peak earlier in the week.
The kiwi dollar recoiled to $0.7254, having lost 0.8 percent overnight, again well off the week's top of $0.7355. The latest jolt to risk appetite came when the Washington Post reported President Donald Trump had decided to fire National Security Adviser H.R. McMaster. That would remove another official that markets had assumed would be a restraining influence on the president, particularly on free trade.
Amid reports Trump was considering tariffs on Chinese goods, White House trade adviser, Peter Navarro, said he would be making recommendations to address China's "theft and forced transfer" of American intellectual property. Yields on New Zealand's two-year government debt are already 36 basis points below those in the United States, while Australian yields are around 33 basis points below.
Australian government bond futures were mixed on Friday, with the three-year bond contract off half a tick at 97.885. The 10-year contract added 1.5 ticks to 97.2900. "The Australian dollar had been resilient during this month's tensions, suggesting that the very bullish global growth narrative is yet to be really shaken," said Westpac senior currency analyst Sean Callow.
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