SYDNEY/WELLINGTON: The Australian and New Zealand dollars managed to steady on Friday as global risk aversion relented for the moment, though both were still nursing heavy losses for the week.
The Aussie was hovering at $0.9015, off Thursday's trough of $0.8930 but well short of the week's high at $0.9234. That left it down 1.9 percent for the week, largely due to investors selling it as a proxy for heightened risk in Asian emerging markets.
It found some support against the yen, though mainly thanks to yen selling for US dollars, with the greenback up at 89.13 yen from Thursday's low at 87.36.
Helping sentiment was better economic data from China, Europe and the United States which pointed to an improving outlook for global growth and so the demand for commodities.
Yet the New Zealand dollar was still down sharply for the week following the Reserve Bank's announcement of controls on mortgage lending, a move that could lessen the need to raise interest rates while also discouraging capital flows from offshore.
The kiwi was struggling at $0.7825 on Friday, having shed 3.3 percent for the week so far.
It even underperformed its Antipodean neighbour, with the Aussie climbing 1.7 percent on the week to NZ$1.1508.
"We released a trade recommendation targeting NZ$1.1850 on the basis that the recently introduced macroprudential measures in New Zealand will act to discourage capital inflows, precisely at the time that policy action by the Fed is doing the same, but on a much larger scale," said analysts at ANZ in a note.
The market even ignored some very positive results from milk giant Fonterra, the country's biggest exporter. The company achieved its highest-ever monthly revenue through auctions in August, with sales volume up 27 percent on the same time last year while revenue ballooned by 107 percent.
The result came despite a health scare over some products and suggested New Zealand exports would not be greatly impacted, if at all.
In debt markets, Australian bonds had a tough time as markets priced in a greater risk the US Federal Reserve would begin tapering its stimulus in September. The resulting rise in Treasury yields lifted borrowing costs across the globe.
In Australia, yields on 10-year bonds steadied at 4.7 percent on Friday, having hit a 17-month peak on Thursday to be up around 9 basis points for the week.
In the futures market, the three-year bond contract was flat at 97.130, but up from a one-month low of 97.070. The 10-year contract inched up a tick to 96.925, but was still down 10 ticks on the week.
New Zealand government bonds recouped a little of their recent hefty losses to nudge yields down around 3 basis points on Friday.
But they too have been pushed steadily higher in recent months by the rise in US Treasury yields. The NZ 10-year bond currently pays 4.71 percent having yielded as little as 3.17 percent as recently as April.
Comments
Comments are closed for this article.