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The Australian and New Zealand dollars were flat on Friday in a U.S. holiday impacted market, but they were set for a second consecutive weekly gain as bets that U.S. rates have peaked helped build upward momentum.
The Aussie was idling at $0.6556, having been mostly rangebound between $0.6540 to $0.6570 overnight. It is up 0.5% for the week, but it still faces resistance at the 200-day moving average of $0.6590.
The kiwi dollar eased 0.1% to $0.6045, after rising 0.5% overnight to $0.6065. It is perched near a three-month top of $0.6085, and headed for a 0.9% advance for the week.
In New Zealand, the National Party formally signed an agreement to form the country's next coalition government on Friday, after negotiating for more than a month over ministerial roles and policies.
The new government intends to narrow the Reserve Bank of New Zealand's (RBNZ) remit, removing the dual mandate on inflation and employment to focus monetary policy only on price stability.
"What we've seen today does not appear to be a game-changer for macroeconomic policy settings and therefore the RBNZ," ANZ analysts said in a note to clients.
"The proposed changes to the monetary policy framework were as anticipated, but at the margin may be seen as hawkish."
The RBNZ will meet next Wednesday, and markets are wagering there is almost no chance that the central bank will surprise with a hike. They expect the first cut will come in the third quarter next year.
New Zealand's two-year swap rates rose 5 basis points (bps)to 5.268% on Friday. They are up more than 23 bps this week.
Australian bonds also struggled this week. Three-year government bond yields surged 13 bps to 4.212%, while 10-year yields rose 11 bps to 4.568%. (Reporting by Stella Qiu; Editing by Jamie Freed)