Long-dated Australian bond futures rallied on Friday after the Treasury halved its estimate of the cost of its wage subsidy scheme to A$70 billion ($45.77 billion) following a review.

The treasury department now estimates the number of employees covered under the "JobKeeper" programme to be about 3.5 million, from a previous forecast of 6.5 million.

Expectations of reduced borrowing by the government and less pressure on its balance sheet pushed down yields on 10-year Australian government bonds to a one-week trough of 0.875% from a high of 0.925% earlier in the day.

The 10-year bond contract jumped 5 ticks to 99.145. Three-year bond futures eased 1 tick to 99.740.

The Australian dollar fell 0.5% to $0.6536 after Fitch Ratings downgraded its outlook on the country's prized 'AAA' rating to "negative" from "positive", citing coronavirus-driven damage to Australia's economy and public finances.

Despite Friday's losses, the currency has gained 1.9% so far this week.

The New Zealand dollar was last down 0.2% at $0.6108. For the week, it has jumped nearly 3% so far after falling 3.3% last week.

Analysts said the implications for the Aussie from the wage subsidy cost was a bit muddy. "The (Treasury) statement paints a somewhat better outlook for the economy but also says 'overall view of the labour market is unaffected by this reporting error'," said Westpac currency strategist Sean Callow.

"So while there's no real change in the job losses, if the Australian government is providing less support as a result, that could be damaging."