The Australian and New Zealand dollars held solid gains on Friday as their US counterpart took a knock from soft economic news that trimmed expectations of an aggressive tightening by the Federal Reserve. The Australian dollar was firm at $0.7093, having rallied nearly 1 percent on Thursday. It briefly popped back above 71 cents and was set to post a rise of 1.1 percent for the week.
Resistance was found at $0.7129 with support around 70 cents and more solidly at $0.6828, a seven-year low touched last week. Also underpinning the Antipodean currencies was a bounce in oil and iron ore prices. The Aussie, however, was still down 2.7 percent for January, reflecting concerns about China, falling commodities and global growth.
The Reserve Bank of Australia holds its monthly policy meeting on February 2 and it is widely expected to keep rates at a record low of 2.0 percent, where they have been since May 2015. The New Zealand dollar regained some ground to $0.6486. It had dipped as low as $0.6419 on Thursday after the Reserve Bank of New Zealand said it might have to cut rates again given inflation remained too low.
The Kiwi was set to end the week where it started. For the month, however, it has skidded 5 percent in the largest monthly decline since June last year. New Zealand government bonds eased at the short end and gained at the long end as the yield curve flattened. Australian government bond futures rose, with the three-year bond contract up 2 ticks at 98.100. The 10-year contract was also 2 ticks higher at 97.3300, while the 20-year contract added 1 tick to 96.8150.