SYDNEY/WELLINGTON: The New Zealand dollar slipped against its US and Australian counterparts on Thursday, undermined by expectations of negative central bank rates. The kiwi slipped 0.4% after a New Zealand central banker said it was "actively working" on negative rates, reinforcing existing expectations for such a move.
"It seems like a very clear message that (negative rates) are their intention, so I think that's what the market latched onto," said BNZ senior economist Doug Steel. That pushed the Australian dollar up to NZ$1.0888, its highest level against the kiwi since Sept. 15.
However, the Australian currency defied a broader risk rally against safe-haven units on Thursday, trading flat at $0.7140, having lifted off a one-week low on Wednesday. Shorter-dated Australian government bond yields recovered from lows hit on Wednesday when investors priced in a rate cut and more bond buying from the central bank. The three-year yield climbed to 0.15%, coming off a record low of 0.138%. Three-year treasury futures dipped 1 tick to 99.815 while ten-year bond futures eased 3 ticks to 99.120.
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