SYDNEY (Reuters) – The Australian dollar hovered near a three-month low on Friday as frail U.S. data fueled concerns about a edged slowdown in the world’s largest economy, sending investors into safe-haven currencies such as the yen and the Swiss franc.

It held at $0.6501, down 0.5% overnight to just above a three-month low of $0.6480 reached on Wednesday. More support is found near $0.6466, with resistance at $0.6580.

The stock fell 0.6% this week, its third straight week of declines, partly due to the end of a popular carry trade in which investors borrowed low-interest yen to invest in higher-yielding currencies.

The Australian dollar hit a six-month low of 96.59 yen on Friday, resulting in a weekly loss of 3.4%. The Australian dollar also broke a six-month low against the Swiss franc, hitting 0.5654 francs.

The New Zealand dollar was luckier and held steady at $0.5943, ending Thursday largely unchanged.

The dollar rose 1.0% this week, largely due to strength against the Australian dollar as markets priced in the possibility of a rate hike by the Reserve Bank of Australia following the release of favourable inflation data.

Despite this, it reached its lowest rate in 2023 against the Japanese currency, at 88.33 yen.

Overnight, data showed US manufacturing activity contracted at its fastest pace in eight months in July, while the employment rate fell sharply, pointing to downside risks to a key jobs report due on Friday.

That has hit Wall Street and lifted bonds, prompting traders to bet on a 30% chance the U.S. Federal Reserve will cut rates by 50 basis points in September as the economy slows. More than three cuts have been priced in for all of 2024.

“With the market firmly in the throes of the bad news is bad news mantra for risk assets and sentiment, and swaps pricing in an element of further emergency cuts, the weak US employment data will not be handled well at all,” said Chris Weston, head of research at Pepperstone.

The change was mirrored in Australia, where investors are pricing in a 90% chance the current 4.35% cash rate could be cut in December. Swaps also imply a total easing of 80 basis points by the end of 2025, more than doubling in a week.

Bonds, however, had a good week on the prospect of early rate cuts. Three-year Treasury futures rose 7 points to 96.37, their highest since early April. That gave them a weekly gain of 31 points, their biggest gain since July 2023.

Ten-year bonds also rose 6 points to a four-month high of 95.97, with a weekly gain of 28 points.