By Charlotte Greenfield
WELLINGTON, June 2 (Reuters) - The Australian and New Zealand dollars slipped on Friday amid broad strength in their U.S. counterpart and on lingering concerns from an unexpected slump in China's manufacturing activity.
The Australian dollar AUD=D4 fell to a three-week low of $0.7372, down half a cent in the past 24 hours and poised to end the week around 0.7 percent lower.
The Aussie had struggled to recover ground after a survey on Thursday of top trading partner China showed the Asian giant's manufacturing activity had contracted for the first time in nearly a year. then faced an uphill battle as the U.S. dollar rallied overnight on upbeat U.S. private sector job figures as investors awaited the closely-watched non-farm payrolls report for another potential boost.
"Throw in another near-2 percent fall in iron ore prices and growing expectations that...Australian growth could come in negative, and the makings of a depreciating AUD are there," said Jason Wong, currency strategist at BNZ Bank, referring to Australia's first quarter gross domestic product data due out on Wednesday.
Nevertheless, the Aussie would likely find buyers around the key technical level of 0.7330, analysts say.
The currency fell to a four-month low of A$1.0445 against the neighbouring Kiwi.
The New Zealand dollar NZD=D4 edged down slightly against the greenback to $0.7069 from around $0.7090 the previous day, struggling to climb beyond the three-month high of $0.7123 hit on Wednesday. The currency was set to be largely flat on a weekly basis.
Trading in the Kiwi would likely be fairly quiet in coming days with a public holiday on Monday. The next main event is on Wednesday when a closely watched auction for dairy - New Zealand's largest goods export earner - would show whether prices continued to recover.
Australian government bond futures eased, with the three-year bond contract YTTc1 off 2 ticks at 98.300. The 10-year contract YTCc1 edged 1.5 ticks lower to 97.5600, while the 20-year contract YXXc1 also shed 1.5 ticks to 97.0100.
Meanwhile, the spread between Australian AU2YT=RR and U.S. US2YT=RR 2-year government bonds steadied at a 16-year low of 28 basis points.
New Zealand government bonds 0#NZTSY= eased, sending yields 5 basis points higher at the long end of the curve.