The Australian and New Zealand dollars slipped on Friday amid broad strength in their US counterpart and on lingering concerns from an unexpected slump in China's manufacturing activity. The Australian dollar fell to a three-week low of $0.7372, down half a cent in the past 24 hours and poised to end the week around 0.7 percent lower. Nevertheless, the Aussie would likely find buyers around the key technical level of 0.7330, analysts say.
The currency fell to a four-month low of A$1.0445 against the neighbouring Kiwi. The New Zealand dollar edged down slightly against the greenback to $0.7069 from around $0.7090 the previous day, struggling to climb beyond the three-month high of $0.7123 hit on Wednesday. The currency was set to be largely flat on a weekly basis. Australian government bond futures eased, with the three-year bond contract off 2 ticks at 98.300. The 10-year contract edged 1.5 ticks lower to 97.5600, while the 20-year contract also shed 1.5 ticks to 97.0100.
Meanwhile, the spread between Australian and US 2-year government bonds steadied at a 16-year low of 28 basis points. New Zealand government bonds eased, sending yields 5 basis points higher at the long end of the curve. The Aussie had struggled to recover ground after a survey on Thursday of top trading partner China showed the Asian giant's manufacturing activity had contracted for the first time in nearly a year. It then faced an uphill battle as the US dollar rallied overnight on upbeat US private sector job figures as investors awaited the closely-watched non-farm payrolls report for another potential boost.
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