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Australia, NZ dollars on track for weekly losses; RBA meeting in focus

SYDNEY, Sept 25 (Reuters) - The Australian dollar was on Friday set for its worst weekly performance since mid-March as investors bet on further monetary policy easing in the country, while its New Zealand peer was also on track to end the week lower.

The Australian dollar was last up 0.3% at $0.7065. Earlier this week, it hit a two-week low of $0.7016.

For the week so far, the currency is down 3%, its largest weekly drop since mid-March when fears of a coronavirus-driven world recession wreaked havoc across global financial markets.

Investor attention is squarely on Oct.6 board meeting of the Reserve Bank of Australia (RBA) where some economists are predicting a cash rate cut to 10 basis points. On the same day, the federal government will unveil its annual budget where it is seen likely to keep the fiscal tap open for years to come.

Across the Tasman Sea, the New Zealand dollar was last up 0.2% at $0.6558.

The kiwi is down 2.9% so far this week, having touched a one-month low of $0.6512 on Thursday.

Earlier this week, New Zealand’s central bank hinted at further monetary easing while warning the economy may need support for a long time as the world grapples with the COVID-19 pandemic.

Weaker risk appetite has also weighed on the antipodean currencies led by dour global economic data, fresh coronavirus restrictions in Europe and fading hopes of U.S. fiscal stimulus.

Next week, the spotlight will return to U.S. politics with the first presidential debate scheduled for Wednesday.

Government bonds were little moved.

In New Zealand, the long-dated bonds were slightly higher, with yields down 1 basis point along the long-end of the curve.

Australian government bond futures were barely changed, with the three-year bond contract down half a tick at 99.78. The 10-year contract was flat at 99.145%. (Editing by Rashmi Aich)

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