By Ian Chua and Naomi Tajitsu
SYDNEY/WELLINGTON, Sept 11 (Reuters) - The Australian dollar was little changed on Friday but on track for its biggest weekly gain in nearly 20 months thanks to a short-covering rally that pulled the currency off a 6-1/2-year trough.
The Aussie last stood at $0.7070, having briefly flirted with 71 cents overnight.
It was more than 2 percent higher on the week and well off Monday's trough of $0.6892 - a low not seen since early 2009.
The Aussie found some fans on Thursday after employment figures at home came in stronger than expected. It then hitched a ride on the back of a solid rally in the yuan.
The Aussie is often used as a liquid proxy for China plays.
"While there was no official word on intervention, it's widely acknowledged that (Chinese) state-run agencies were in the market selling USD," said Stephen Innes, senior trader at FX/CFD firm OANDA Australia and Asia Pacific.
"The Aussie is still in the rough, despite the uptick in domestic employment, but traders might be reluctant to aggressively short at these levels as China may have more surprises up their sleeve."
The New Zealand dollar was steadier after a near 2.0 percent slide in the previous session. It was up 0.3 percent on the day at $0.6307 NZD=D4 , pulling away from Thursday's low of $0.6256.
The kiwi was buttressed by broad weakness in the U.S. dollar, and rose against most other major currencies, as the previous day's selling momentum petered out.
Investors had sold the currency on Thursday after the Reserve Bank of New Zealand cut interest rates and left the door open for more easing. The central bank also called for further falls in the currency.
Short-dated New Zealand government bonds rose, pushing the yield on 2017 notes 2 basis points lower, while longer dated bonds eased.
Australian bond futures were softer with the three-year contract YTTc1 2 ticks lower at 98.105. The 10-year contract was also down around 2 ticks at 97.2375. (Editing by Kim Coghill)