WELLINGTON/SYDNEY: The Australian and New Zealand dollars nursed hefty losses on Friday and wallowed at multi-week lows against the dollar on fears of a looming credit crunch as euro zone sovereign borrowing costs surge.
The Australian dollar soft at $0.9980, having pierced through parity overnight for the first time since Oct 12. It traded as low as $0.9973 after a very brief rally ran out of steam at $1.0011.
Key support around $0.9920/40, the Ichimoko cloud base and the 61.8 pct retracement of the October rally.
Aussie has fallen 3.5 pct this week on worries the euro-zone debt crisis could spread further and trigger a global financial meltdown.
NZ dollar at $0.7578, having hit a six-week trough of $0.7567 in NY overnight. It has shed more than 5 pct so far this month.
Support seen at $0.7554, with resistance at $0.7625 and then $0.7685.
Asian stocks under pressure with Korea, Singapore, Japan and Australia at least 1 pct lower. S&P futures down 0.04 pct.
NZ bond yields down 1 bp, after tumbling this week to record lows on euro zone debt crisis and as ample funds -- estimated up to NZ$9 bln -- from the maturity of 2011 bonds this week seek reinvestment.
NZ bond outperformance likely to last for a few more days until portfolio adjustment completed.
Markets now pricing in 16 bps rate cuts over the next 12 months, a dramatic turnaround from just three weeks ago when markets had factored in rate rises.
Financial market pricing on NZ rate outlook at odds with analysts, who are picking rate rises to start in the first half of next year.
NZ's benchmark 10-year bond yields now at 3.93 pct vs Aussie's 4.057 pct, after sitting some 10 bps above Aussie yields a month ago.
That helps support the Aussie against the kiwi, trading last around NZ$1.3157, a touch below a six month high of NZ$1.3220 on Thursday.
Antipodeans are even down on the euro as the common currency is underpinned by repatriation flows from European banks. Euro at A$1.3466, having hit a four-week high at A$1.3493. Against kiwi, it is at NZ$1.7718, near a 4-1/2 month high of NZ$1.7790 hit overnight.
Risk aversion lifts Australian debt futures with the three-year debt contract up 0.04 at 96.720, having hit a 2.5-yr peak on Thursday. The 10-yr contract up 0.02 points to 95.925, off a six-week peak.
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