By Swati Pandey and Charlotte Greenfield
SYDNEY/WELLINGTON, Sept 16 (Reuters) - The Australian and New Zealand dollars treaded water on Friday after gaining overnight following disappointing U.S. economic data that dimmed already low expectations of a Federal Reserve rate hike next week.
The Australian dollar AUD=D4 held at $0.7510, bouncing from a trough of $0.7443 hit earlier in the week. A break under that would take it to the lowest since late July.
The New Zealand dollar NZD=D4 stood at $0.7318, following two days of gains. It is set to end the week largely unchanged.
Investors were in a wait and see mood ahead of a series of policy decisions next week by the Reserve Bank of New Zealand, the Bank of Japan and the Fed.
"Those three central banks next week are going to be quite crucial, so in the next few trading days these currencies should bob around and not do much," said BNP currency strategist Jason Wong.
The Aussie, still near seven-week lows, is on track for its second weekly loss. The currency had been under pressure from investors unwinding carry trades in high-yielding, riskier assets on concerns global central banks were reaching the limits of policy stimulus.
A mixed jobs report on Thursday also hinted at a domestic Achilles' heel for some.
"Our sense is that the improvement in the labour market evident earlier this year has at a minimum slowed," said Ray Attrill, global co-head of FX Strategy at National Australia Bank.
"It plays to our view that further rate cuts may be needed next year to prevent the unemployment rate trending back higher."
The Reserve Bank of Australia (RBA) has already eased twice this year and markets 0#YIB: imply around a one-in-three chance of another by Christmas.
Meanwhile, the euro EURAUD=R eased against the Aussie after a hitting a 2-1/2 month high, while it held steady against the yen AUDJPY=R at 76.70, having lost nearly 1 percent this week.
The greenback slipped after data issued on Thursday showed U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods. ECONUS Zealand government bonds 0#NZTSY= eased, sending yields 2 basis points higher.
Australian government bond futures were mixed, with the three-year bond contract YTTc1 up 2 ticks at 98.44.
The 10-year contract YTCc1 was almost unchanged at 97.88. Cash yields were near two-month peaks after a spike in longer-term Japanese bond yields was mirrored across bond markets globally. by Kim Coghill)