SYDNEY/WELLINGTON (Reuters) - The Australian dollar held near crucial chart support of 70 U.S. cents on Friday, on track to fall for a third straight week due to clouds over the outlook for both global and domestic growth, the New Zealand dollar paused after three days of decline.
The Australian dollar was last hovering near a two-month trough at $0.7010.
A fall below $0.70 could take it to levels last seen in early 2016, barring a 'flash crash' event in January when the Aussie briefly saw $0.6715. The currency quickly recuperated to trade well above $0.70 in the days following the wild swing.
So far this week, the Aussie has lost about 0.9 percent, having fallen 0.7 percent and 0.1 percent in the previous two weeks.
The currency took a small hit earlier in the day from disappointing import data from China, Australia's top trading partner and major buyer of Australian iron ore, coal, gold wines, milk and other farm produce.
The slowdown in Chinese imports has coincided with Australia's domestic economy cooling, largely as a result of a downturn in the housing market.
And that has prompted some of the nation's biggest banks such as Westpac, National Australia Bank and Macquarie to expect cuts in the official cash rate later this year.
"Growth appears to have lost significant momentum, placing at risk further improvement in the labour market," NAB economist Alan Oster said in a note revising the bank's policy rate outlook from no change to two cuts this year.
The futures market is fully pricing in a 25-basis-point cut to the 1.50 percent cash rate by September and sees a 30 percent chance of another cut by December.
NAB expects the Aussie to trade between $0.6800 and $0.7300 through mid-2019.
Across the Tasman Sea, the New Zealand dollar hovered around $0.6754, pausing after three straight days of falls. For the week, the kiwi dollar is now down 0.6 percent and on track for its third straight weekly loss.
New Zealand government bonds gained, sending yields down 5-6 basis points on the long-end of the curve.
Australian government bond futures gained, with the three-year bond contract up 2 ticks at 98.40. The 10-year contract added 5.5 ticks to 97.97.
This story refiles to insert dropped final word in headline
(Editing by Simon Cameron-Moore)
