The Australian and New Zealand dollars were losing ground to their US counterpart on Friday as the latest US economic data seemed to add to the case for an interest rate hike by the Federal Reserve. The Australian dollar was stuck at $0.7792, having skidded 1 percent overnight. Support was found at $0.7786 and $0.7740. It touched a one-month peak of $0.7914 on Thursday but still looked set to end the week 0.6 percent lower.
Part of the weakness came after news US core inflation rose more than expected, driving Treasury yields higher and supporting the dollar. Investors are now waiting on revised fourth quarter US gross domestic product data due later on Friday. The Aussie had already been knocked on Thursday after a weak business investment report at home had added to the case for more interest rate cuts by the Reserve Bank of Australia (RBA).
Markets imply an around 50-50 chance of an easing on March 3, while they are fully priced for a move by May. The Antipodeans fared better on the euro which was undermined by steep falls in euro zone bond yields. The common currency was on track for weekly losses of 1.7 percent versus the kiwi and 1 percent on the Aussie.
The New Zealand dollar held at $0.7541, after lapsing from a one-month high of $0.7613 "The $0.7610/20 area will be a major hurdle, so some consolidation can be expected between $0.7500 and $0.7560," Westpac senior strategist Imre Speizer said in a note, adding that a move towards $0.7700 might be possible in coming weeks. The kiwi was firm on the Aussie at NZ$1.0346 having gained 3.8 percent this month to touch record highs. Australian government bond futures eased, with the three-year bond contract off 1 tick at 98.210. The 10-year contract shed 4 ticks to 97.5800.
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