The Australian and New Zealand dollars hovered near recent lows on Friday as the greenback held at a one-year peak and amid worries of an escalation in the ongoing Sino-U.S. trade war.
The Australian dollar AUD=D4 traded at $0.7354, near this week's trough of $0.7311, the lowest since early July.
For the week, the Aussie was down about 0.9 percent, and on track for its worst performance since mid-June.
The New Zealand dollar NZD=D4 was last at $0.6748 after falling 0.7 percent overnight to $0.6713, a level not seen since the start of this month.
The kiwi was down 0.3 percent for the week, on course for a second straight weekly loss.
Investors have been selling both antipodean currencies as a liquid proxy for Chinese assets, which have been beset by fears the trade battle with the United States will hit China's economic growth.
The Chinese yuan CNY=CFXS has tumbled to near 13-month lows. On Friday, major state-owned Chinese banks were seen selling U.S. dollars in the market.
In Australia, the focus is on second quarter consumer price index (CPI) data due Wednesday which is expected to show core inflation, a measure closely watched by policymakers, will remain below the central bank's 2-3 percent target band.
The Reserve Bank of Australia (RBA) has left interest rates at a record low 1.50 percent for almost two years, awaiting a revival in inflation and wages growth. With both still seen lukewarm, the market expects the period of stable rates to extend for another year.
0#YIB: "We view the structural weakness in Australia as especially pronounced now that China's economic outlook looks increasingly uncertain, and continue to fade any meaningful AUD rally," Morgan Stanley analysts said in a note to clients.
"With the RBA's increasing focus on the downside risks and still-rising household leverage, it may remain cautious around the timing of starting a tightening cycle."
The latest RBA minutes out this week showed board members spent considerable time discussing household debt. Members found that households with high debt are more vulnerable to economic shocks and therefore more likely to cut consumption.
New Zealand government bonds
0#NZTSY= inched higher, sending yields about 5 basis points lower at the long-end and 2 basis points lower at the short-end of the curve.Australian government bond futures rose, with the three-year bond contract YTTc1 up 3 ticks at 97.89. The 10-year contract YTCc1 rose 4 ticks to 97.380.
