The Australian dollar slipped to a more than one-month trough on Friday and was on track for its second straight weekly loss amid a global flight to safety while its New Zealand cousin also struggled near recent lows. The Australian dollar eased 0.2 percent to $0.7767, a level last visited in late December. For the week so far, it is down about 2 percent, piling on to the previous week's 2.3 percent decline.
The New Zealand dollar slipped for a third straight session to $0.7210 to be near the one-month low of $0.7176 touched on Thursday. It is down 1.3 percent this week. The antipodean currencies have had a rough ride this week as a tumble in global financial markets has rattled investors, shrinking risk appetites. The Aussie and the kiwi are favoured liquid hedging proxies during times of financial stress, and moves can often be volatile in the pair.
The two were also under pressure amid expectations interest rates in Australia and New Zealand will remain at record lows for a long time. New Zealand government bonds were a touch firmer with yields down 1 basis point at the long-end of the curve. Australian government bond futures gained too, with the three-year bond contract up 5 ticks at 97.870. The 10-year contract inched up 3 ticks to 97.145.
Just on Thursday night, Reserve Bank of Australia (RBA) Governor Philip Lowe said that the RBA Board did not see a "strong case" for a rise in rates in the near term. On Friday, the RBA trimmed the unemployment forecast but still expressed doubts core inflation will reach the floor of its 2-3 percent target band until mid-2019, a strong signal that rates won't be rising for a while yet.
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