The Australian dollar regained some ground on Friday, while the New Zealand dollar sagged near an 11-month trough, with both currencies on track for weekly losses. The Australian dollar edged up to $0.7380, but was still within reach of a four-month trough of $0.7329 touched on Tuesday. It was on track for its seventh weekly loss in eight with a drop of 0.5 percent.
Much of the damage came after disappointing building approvals and retail sales numbers gave investors their rationale to cut Aussie long positions. It was also undermined by retreating iron ore prices which slipped to $60.38 a tonne on Thursday, not far above a six-month low, according to Metal Bulletin. The Aussie is sensitive to iron ore, Australia's top export earner. Support was found around $0.7340 with resistance near $0.7395.
"We remain sceptical of any aggressive upside from here unless the wheels fall off the US dollar and commodities make a solid rebound," said Matt Simpson, a senior market analyst at Thinkmarkets. Also capping a rise was diminishing yield appeal. The spread between Australian and US two-year bonds shrunk to 33 basis points, the lowest in 16 years.
Across the Tasman Sea, the New Zealand dollar edged down to $0.6837, close to an 11-month low of $0.6829 on Thursday. New Zealand government bonds gained, sending yields 4.5 basis points lower along the curve. Australian government bond futures rose, with the three-year bond contract up 2 ticks at 98.150. The 10-year contract also gained 2 ticks to 97.3350, while the 20-year contract added 1.5 ticks to 96.7550.