By Wayne Cole and Charlotte Greenfield
SYDNEY/WELLINGTON, Oct 30 (Reuters) - The Australian dollar remained fragile on Friday and underperformed its steadier New Zealand neighbour, as falling global commodity prices and the risk of a rate cut at home weighed on sentiment.
The Aussie dollar AUD=D4 did struggle up to $0.7096 from a trough of $0.7067, but was still down 1.7 percent for the week.
The kiwi edged up to $0.6724 NZD=D4 , and well away from a low of $0.6622 touched earlier in the week.
Undermining the Aussie has been speculation the Reserve Bank of Australia (RBA) might cut interest rates at its policy meeting next week, plus the risk of a hike in U.S. rates by the end of the year.
Soft domestic inflation data and the recent decision by major Australian banks to lift mortgage rates have led investors to price in around a 40 percent chance 0#YIB: of a cut in the RBA's 2.0 percent cash rate on Nov. 3.
Seventeen of 21 analysts polled by Reuters felt it was too early for an easing AU/INT , in part because recent news on economic activity had been fairly upbeat.
Figures out Friday showed credit grew by an outsized 0.8 percent in August with business lending enjoying its largest increase since 2008.
"The sustained pick-up in business credit growth may signal the start of an improvement in non-mining business investment and is another indicator that suggests there is a more wide-spread pick-up in the non-mining economy," said Tapas Strickland, an economist at NAB.
"We continue to see the RBA on hold."
Across the Tasman, the Reserve Bank of New Zealand held its rates steady this week following three straight cuts, though it cautioned that further easing was likely to be needed at some point. urn:newsml:reuters.com:*:nL3N12S5O4
The RBNZ kept rates on hold at 2.74 percent as expected, but traders noted the central bank made no fresh attempt to talk down the currency and also gave no strong hint of an imminent rate cut, two factors that kiwi bears were counting on.
Aiding the kiwi was a survey by ANZ Bank that showed a bounce in business sentiment, thanks in part to a recent lift in dairy prices. urn:newsml:reuters.com:*:nW9N10V02B
New Zealand government bonds 0#NZTSY= eased, with yields 4 basis points higher.
Australian government bond futures eased in line with U.S. Treasuries. The three-year bond contract YTTc1 lost 2 ticks to 98.210, while the 10-year contract YTCc1 dropped 4 ticks to 97.3500. The 20-year contract YXXc1 eased 3 ticks to 96.7950. (Editing by Richard Borsuk)