SYDNEY: Yields on Australian three-year government bonds slipped to a record low on Friday as the country's central bank pushed back against market speculation of early interest rate hikes though the local dollar jumped to a one-week high.
Yields in the cash market had jumped to 0.188% late last month during a global bond sell-off. Three-year bond futures had then implied a yield of 0.385%, much higher than the Reserve Bank of Australia's (RBA) 0.1% anchor.
In response, the RBA this week doubled the fee it charges for lending out April 2023 and April 2024 Australian government bonds, both key to policy stimulus.
That sent the three-year bond yield to under 0.096%, the lowest on record.
On Friday, the three-year bond contract was down a shade, implying a yield of 0.228%. It had earlier jumped to 0.385%.
That still did not stop the Aussie dollar from hitting a one-week high on Friday.
The Aussie climbed to $0.7801, a level not seen since March 4. It was last at $0.7780 with key resistance seen around $0.7840, a breach of which could see it flying above 80 US cents. The New Zealand dollar surpassed key resistance at $0.7200 to go as high as $0.7240, a level unseen since March 3. The kiwi has drifted away from the week's trough at $0.7103, which now marks a strong support. For the week so far, the kiwi is up 0.7% while the Aussie has risen 1.3%.