Australia, NZ dlrs trip after Trump tests COVID-19 positive

SYDNEY, Oct 2 (Reuters) - The Australian and New Zealand dollars slipped on Friday and bonds jumped as risk appetite soured after U.S. President Donald Trump tested positive for COVID-19, though the two currencies were still set for weekly gains

The Australian dollar, a liquid proxy for risk, was last off 0.65% at $0.7135, with losses accelerating after confirmation that Trump and Melania were in quarantine.

Trump said on Twitter that he and his wife tested positive for coronavirus after Hope Hicks, a senior advisor who recently traveled with the president, contracted the disease.

Analysts said the outcome could cause a new wave of market volatility ahead of the hotly-contested presidential election in November.

“Will the next presidential townhall debate on the 15th now take place? Seems this is Trump’s out if he wanted one,” said Chris Weston, Melbourne-based strategist at Pepperstone.

“What caught a lot of people’s attention was a 5% sell-off in copper, though, and that had a lot of people talking... So, watch the daily chart of copper, it could be very telling from here and the idea of trading reflation. Fiscal is key for that.”

The Aussie is also directly correlated with commodity prices as the country’s top exports include iron ore, coal and metals.

For the week, the Aussie is still up 1.6%.

The New Zealand dollar was last off 0.5% at $0.6619. For the week, it was up 1.1%, paring some of the 3.1% loss from the previous week.

New Zealand government bonds rose, sending yields about 3 basis points lower across the long-end of the curve.

Australian government bond futures jumped, with the three-year bond contract up 2 ticks at 99.79. The 10-year contract surged 7 ticks to 99.175. (Editing by Kim Coghill)