SYDNEY/WELLINGTON: The Australian and New Zealand dollars were catching their breath on Friday after recovering from a sickening slide the previous session, although both were nursing losses for the week.
The Aussie held at $0.7667, having dived as deep as $0.7592 overnight before rebounding as the market’s fickle mood swung back toward risk assets.
The bounce took the currency back above chart support around $0.7645/50 but left it down 0.6% on the week so far and well short of the week’s $0.7764 peak.
The kiwi dollar had an equally wild ride to stand at $0.7165 after sliding as far as $0.7106 at one stage overnight. Again it was well off the week’s top of $0.7246, but did avoid a damaging breach of support at $0.7097.
Three-year bond yields at 0.12% remain pinned near the RBA’s target of 0.10%, while commercial bank balances at the central bank have ballooned to over A$139 billion as it keeps the system flush with cash.
Australian 10-year bond yields edged up to 1.09% having tracked gyrations in US Treasuries all week. That left yields 3 basis points above the US, having spent all of January in a range of -7 to +7 basis points.
The Aussie was undermined in part by a sharp fall in prices for iron ore, Australia’s single biggest export earner, as Beijing talked about restraining steel production this year.