The Australian and New Zealand dollars skidded to one-week lows on Friday as investors fretted about the outlook for US fiscal stimulus as President Donald Trump struggled to get his healthcare bill passed. The Australian dollar slipped for a fourth straight session to $0.7610, a level not seen since March 15. It was down 0.7 percent for the week, the most since December 23.
The Aussie has taken a hit in recent days as traders unwound carry trade on concerns a failure on the healthcare bill could jeopardise Trump's other fiscal measures. Elsewhere, the Aussie steadied near a 2-1/2-month low on the yen after falling for three straight sessions. The euro stayed at a one-week top on the Aussie, while the pound was at a 1-1/2-month peak.
The New Zealand dollar inched 0.3 percent lower to $0.7007, the lowest since March 17. The kiwi is set to end the week more or less flat, despite an unexpected rise in dairy prices on Wednesday. On Thursday, the Reserve Bank of New Zealand kept interest rates at a record low and reiterated it would stay on hold for a "considerable" period of time. New Zealand government bonds gained, sending yields 1.5 basis points lower.
Australian government bond futures slipped, with the three-year bond contract down 1 tick at 97.99. The 10-year contract was off 2 ticks at 97.20. "A bit of air has come out of the Trump "reflation" trade this week," Capital Economics said in a note. "Admittedly, we think that the fiscal stimulus may be delayed, rather than scuppered, if the health care bill is defeated." A drop in the price of iron ore - Australia's top export earner - also weighed on the currency. The September iron ore contract on the Dalian Commodity Exchange has fallen almost 9 percent this week.
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