SYDNEY/WELLINGTON: The Australian and New Zealand dollars flew to record peaks against the euro on Friday as rate cuts in Europe boosted demand for carry trades, even as an easing in China and the UK failed to spark a broader rally in risk assets.
* Euro dived 1.2 pct on the Aussie overnight in the largest daily decline so far this year, reaching as low as A$1.2015 and smashing the previous trough of A$1.2124 hit back in February.
* It also slid 1 pct on the kiwi to a low of NZ$1.5366 .
* The European Central Bank cut its refi rate to a record low of 0.75 pct and its deposit rates to zero, but still disappointed many who had for even bolder action. The Bank of England also expanded its asset purchase programme.
* In a major surprise, the People's Bank of China cut its rate by 31 bps to 6 pct following a rate cut just a month ago that also came out of the blue.
* Still, the action fails to spur confidence as worries over the global outlook weighed on risk sentiment, with many wary ahead of the US job report later Friday.
* The easing action contrasted with the Reserve Bank of Australia (RBA) which this week left rates on hold at 3.5 pct and showed no urgency to move again.
* Recent upbeat domestic data have seen the market scale back expectations for how fast and far rates might be cut further, with an easing in August now seen as less than a 50/50 chance. .
* Aussie volatile, jumping to an overnight high of $1.0328 on central banks' easing from $1.0259 in late Thursday trade before pulling back to a low of $1.0250. It last traded at $1.0289, still up 0.3 pct from the previous day.
* Support at $1.0230 and $1.0212, while $1.0348 capping the top side.
* NZ dollar also in tow, steadying last at $0.8035, still up a touch from $0.8026 on Thursday. It climbed to an offshore high of $0.8076 before retreating to a low of $0.8006.
* Euro pressured broadly, hitting a one-month low against the dollar. European equities and Wall Street lower, while the commodities markets were mixed, with gold and copper lower but oil up. The CRB commodity index up 0.2 pct.
* NZ government bonds track US Treasuries higher, with yields down 4 bps along the curve.
* But Australian government bond futures lower with the three-year contract indicated down 0.040 points at 97.520 and the 10-year 0.050 points lower at 96.960.
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