Aussie, kiwi frazzled

The Australian and New Zealand dollars were left to languish on Friday with investors frazzled by a week full of conflicting headlines on the Sino-US trade dispute, while bonds were content to sit on their recent hefty gains.

The Aussie was pinned at $0.6786 having lost 0.5% for the week so far. That was back from a $0.6835 top early in the week, which now stands as chart resistance, with support at the November trough of $0.6770 the next target.

The kiwi dollar has fared better to be a fraction firmer for the week at $0.6404, though it failed to clear resistance at $0.6437 and, more importantly, the November top at $0.6466. Support comes in at $0.6382 and $0.6323.

The kiwi has been aided by buying against its Australian counterpart, with the Aussie down 0.4% for the week at NZ$1.0604 after touching a three-month low at $1.0576.

The shift has seen Australian bond yields fall further and faster than those in New Zealand, so that 10-year Aussie yields now pay 27 basis points less compared to just 11 basis points early this month.

Australian three-year bond futures have climbed 19 ticks in 10 sessions to reach 99.260. The 10-year yields stood at 1.10% on Friday, having fallen 24 basis points in the same period.

The Aussie has been pressured by a diverging outlook for domestic interest rates with market wagering the Reserve Bank of Australia (RBA) is much more likely to ease again than its New Zealand counterpart.