SYDNEY - The Australian dollar was poised for its biggest weekly decline in two months on Friday, while its New Zealand counterpart was also set for losses, as risk appetite took a knock from a tech stock rout.
The Australian dollar was down 1.17% this week and is on track for its largest fall since mid-June.
On the day, it was slightly higher at $0.7275.
The New Zealand dollar slipped 0.9% this week and is set for its biggest weekly loss since mid-May.
It was last up 0.2% at $0.6664.
“Volatility has returned to markets, particularly equities with some notable wobbles in the tech sector,” ANZ analysts wrote in a note, saying it made for an “interesting backdrop” for the U.S. Federal Reserve policy meeting next week.
U.S. technology stocks tumbled this week as investors reconsidered their high valuations against a backdrop of a slow global economic recovery from the coronavirus-led slump.
On the home front, investors’ focus next week will be on employment report for August, which will show the dire effects of stricter mobility restrictions in the second most-populous state of Victoria to curb the coronavirus outbreak.
Economists expect employment to fall by 50,000 and the jobless rate to jump to 7.7% in August, according to a Reuters poll.
“The surge of Covid-19 cases in Victoria and resultant restrictions carry real concern for domestic growth,” ANZ analysts said.
“Medium-term prospects are likely to hinge on how fast global activity can resume and how well economies cope with surges in case numbers.”
ANZ is “mildly bullish” on the antipodean currencies for the month ahead, seeing fair value for the Aussie at $0.73 and at $0.66 for the kiwi.
New Zealand government bonds were mostly unchanged at the long-end of the curve, but they were slightly higher at the short-end.
The country will report gross domestic product data next Thursday.
Australian government bond futures were mixed, with the three-year bond contract flat at 99.710. The 10-year contract was up 2 ticks at 99.0780.