SYDNEY/WELLINGTON: The Australian and New Zealand dollars dropped to one-week lows on Friday as investors dumped risky assets and sought safety after dire US data raised the spectre of world recession and renewed concerns about European banks.
Australia government bond benefit, with 10-year futures jumping to highest since March 2009 for an implied yield of 4.2 pct. That is way below the 4.75 pct cash rate and an inversion that sometimes comes with fears of recession.
The 3-year contract climbed 0.16 points at 96.470 and the 10-year up 0.170 points at 95.810.
The Aussie dollar off half a cent to $1.0346, after testing a session low of $1.0316. Usual talk of Asian central banks on the bid helped it hold above the 200-day MA at $1.0320. Stops below that level would open the way to $1.0265, the 50 pct retracement of the $0.9927/$1.0601 move.
The Aussie has dropped 6 pct this month.
Market also adding to the chance of rate cuts from the Reserve Bank of Australia (RBA) given the gloom globally. Interbank futures imply a cut of 25 bps at the next policy meeting in September and 116 bps of easing by Christmas.
The New Zealand dollar slips to $0.8194, having touched a one week low of $0.8176. It closed in New York at $0.8210 from about $0.8350 in late local trade on Thursday.
Kiwi testing support at $0.8180 below which is $0.8165, the 100-day moving average, and then $0.8130. Resistance initially at $0.8230 and $0.8270.
General flight to safety as investors shun risk, sending regional stock markets tumbling and prompting rallies in spot gold and Treasury bonds. Korean shares off 4.5 pct, while Australia and Hong Kong stocks down more than 2 pct. S&P futures shed 0.7 pct.
Gold scales a fresh record high of $1,836.46 an ounce, while the yen strengthens further.
Aussie skids to a one-week trough of 79.13 yen. It has lost more than 7 pct this month, despite intervention earlier in August. NZ dollar also sinks to 62.38 yen, more than 2 pct lower this week.
Against the NZ dollar, the better-performing Aussie reaches around NZ$1.2600 , after scaling a 3-week peak of $1.2673 offshore.
Data shows New Zealand migration gains have all but dried up, with another 220 people lost in July, the fifth consecutive monthly decline, while annual gains fall to their lowest level in nearly a decade. See Suggests domestic demand pressures remaining soft.
NZ government debt follows US Treasuries and rallies solidly, sending yields as much as 5 basis points lower. Interest rate futures prices rise 7 ticks.
Copyright Reuters, 2011
Comments
Comments are closed.