The Australian and New Zealand dollars slipped on Friday and were poised for their worst weekly performances since April, underscoring a resurgent greenback as talk of another US rate rise gathers momentum. The Australian dollar was a touch weaker at $0.7840, not far from $0.7799 set on July 18. For the week, the Aussie is down about 1.5 percent, its worst showing since April 4. The New Zealand dollar slipped 0.4 percent to $0.7211 but was off a low of $0.7167 plumbed on Thursday, the weakest since September 5.
The kiwi has lost 1.6 percent this week to clock its worst performance since late April. New Zealand government bonds gained, sending yields 2.5 basis points lower at the long end of the curve. Australian government bond futures rose, with the three-year bond contract adding 2 ticks to 97.810. The 10-year contract was up 3 ticks at 97.1400.
The falls have come on the back of rising US Treasury yields after Federal Reserve Chair Janet Yellen indicated the Fed would hike rates in December, which would be the third increase this year. At the same time, Reserve Bank of Australia (RBA) Governor Philip Lowe signalled a patient approach to any changes to policy, with the cash rates set to stay at a record low 1.50 percent for a while yet. The RBA meets next week for its October policy meeting where it is widely expected to stand pat.
On Thursday, the Reserve Bank of New Zealand (RBNZ) left rates unchanged at 1.75 percent at a policy review with an accompanying statement that was perceived as dovish by the market. "The one consistency is the dovish message that the RBNZ sent after leaving interest rates on hold," said Paul Dales, chief economist at Capital Economics.