The New Zealand dollar headed for a hefty weekly gain on Friday after bears were badly wrongfooted by the country's central bank, leaving its Australian counterpart near its lowest against the kiwi since early 2017. The kiwi dollar was up 1.1 percent for the week at $0.6816, and a long way from a low of $0.6720 hit early in the week. The Aussie had shed 1 percent on the kiwi for the week so far to stand at NZ$1.0401, just above a trough of NZ$1.0366.

The New Zealand currency took off on Wednesday when the central bank surprised bears by being more balanced on the economic and policy outlook than many had expected. The Aussie dollar trailed behind at $0.7093, almost unchanged for the week but off the recent five-week low of $0.7054.

It had popped higher overnight when the US dollar was hit by a dismal retail sales report, but failed to clear resistance at $0.7136. Australian government bond futures followed Treasuries higher in the wake of the poor US data. The three-year bond contract added 2.5 ticks to 98.340, while the 10-year contract rose 4 ticks to 97.8950.

Copyright Reuters, 2019