By Swati Pandey and Ana Nicolaci da Costa
SYDNEY/WELLINGTON, Oct 13 (Reuters) - The Australian dollar rose for a fourth straight session on Friday and was poised for its first weekly gain since early September, while its New Zealand counterpart paused near a one-week top.
The Australian dollar AUD=D4 edged 0.22 percent higher to $0.7834, the highest since Oct. 5. For the week, the Aussie is up 0.8 percent, after falling for four weeks on the trot.
The gains have come on the back of a subdued greenback which is down 0.8 percent so far this week on a combination of factors including speculation that further tightening by the U.S. Federal Reserve will proceed at a snail's pace.
The Aussie was also supported by record high iron ore imports by China in September, data out on Friday showed, in a boost for Australia's commodity-driven economy.
Iron ore is Australia's single biggest export earner while China is its No.1 trading partner. the Reserve Bank of Australia (RBA) released its half-yearly Financial Stability Review in which it warned that higher interest rates could hit the country's heavily-indebted households. we took away from reading today's FSR was that...there is a high degree of awareness at the RBA that any increase in funding costs will create stress on households," said Credit Suisse (SIX:CSGN) analyst Damien Boey.
"We have tended to be of the view that whilst the next move in Australian rates will be an increase, it probably won't be until well into 2018, and that Governor Phil Lowe is in no rush to start the tightening cycle."
The RBA has held interest rates at a record low 1.50 percent for more than a year as it juggles lukewarm inflation, slow wages growth and sky-rocketing household debt. Lowe recently warned that households should be preparing for rising rates, albeit not for some time yet.
Across the Tasman Sea, the New Zealand dollar NZD=D4 was a touch firmer at $0.7137. The kiwi has bounced this week from over four-month lows of $0.7052 hit on Monday, as investors buy back into a cheapened market.
For the week, it is up 0.7 percent.
The Kiwi has fallen 2.9 percent since an inconclusive election on Sept.23 when no single party won a majority. The near-term fate of the currency will be determined once the composition of the ruling coalition is known, likely sometime next week.
New Zealand government bonds 0#NZTSY= rose, sending yields about 1 basis point lower across the curve.
Australian government bond futures were unchanged, with the three-year bond contract YTTc1 at 97.850 and the 10-year contract YTCc1 at 97.1700. (Editing by Simon Cameron-Moore)