The Australian dollar licked its wounds on Friday amid concerns the country's lucrative exports of coal to China were under threat, though policy makers and analysts played down the danger. The Aussie huddled at $0.7092 and was down 0.6 percent for the week. It shed 1 percent on Thursday after briefly venturing as high as $0.7207 in the wake of strong local jobs numbers.
The New Zealand dollar got caught in the cross fire and slipped to $0.6774, having been as high as $0.6877 on Thursday. It was off 1.3 percent for the week so far. The Aussie came unstuck when Reuters reported the Chinese port of Dalian had banned imports of Australian coal, sparking talk the motive might be political.
Futures reacted by paring the probability of a hike this year to around 80 percent, from more than 100 percent late on Thursday. Australian government bond futures fell, with the three-year bond contract off 5.5 ticks at 98.350. The 10-year contract dropped 4 ticks to 97.9050.
The kiwi took another hit when the Reserve Bank of New Zealand announced more details of its plans to force banks to raise their capital requirements. Australian Prime Minister Scott Morrison and Reserve Bank of Australia (RBA) Governor Philip Lowe both urged markets not to "jump to conclusions" on the report, noting Chinese ports routinely delayed imports for environmental and competition reasons.
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