SYDNEY (Reuters) - The Australian and New Zealand dollars were on track for a third straight weekly loss as speculators bet central banks of both countries could cut rates as early as next week.
The Australian dollar was down 0.5 percent for the week on top of its hefty 1.7 percent loss the previous one. It was last trading at $0.6997 after falling below the key psychological support of $0.7000.
The New Zealand dollar was also off 0.5 percent this week, identical with the hit it took the prior week. The currency was last at $0.6620, inching closer to a recent five-month trough of $0.6581.
The antipodean currencies have been on a downhill track since mid-April on a combination of factors, including a stronger U.S. dollar, weaker-than-expected domestic inflation and talk of policy easing in both countries.
Official figures released early Friday showed Australian dwelling approvals slid more sharply than forecast in March, adding to views that the country's economic momentum is slowing.
Traders will be looking at where the Aussie finishes on Friday, as a close below $0.7000 would be the first since January 2016.
Australian investors "will be on edge" when the Reserve Bank of Australia meets on Tuesday as the debate on whether it should cut rates "continues to heighten", Mithun Fernando, Sydney-based investment analyst at Rivkin Securities said in a note.
Interest rate futures are pricing in a 33 percent chance of an easing at the May 7 meeting. About 40 percent of 42 economists polled by Reuters predict a 25 basis point cut to an all-time low 1.25 percent. [AU/INT]
On May 8, the Reserve Bank of New Zealand (RBNZ) meets, and overnight index swaps point to a 50-50 chance it will cut rates.
Traders are generally long Aussie against the kiwi dollar as they see a greater chance of a rate cut in New Zealand, with RBNZ Governor Adrian Orr decidedly more dovish than his RBA counterpart Philip Lowe.
As a result, the Aussie climbed 1.3 percent against the kiwi in April. Some of those long Aussie positions were unwound last week after the first-quarter inflation rate was lower than expected.
New Zealand government bonds were barely changed.
Australian government bond futures were little changed too, with the three-year bond contract off half a tick at 98.725. The 10-year contract was flat at 98.20.
(Editing by Richard Borsuk)
