SYDNEY/WELLINGTON: The Australian dollar fell sharply on Thursday and 10-year bond futures hit two-month highs after China said it would indefinitely suspend all activities under the China-Australia strategic economic dialogue mechanism.
Sino-Australia relations have deteriorated since Canberra called for an international inquiry into the origins of the coronavirus, with China responding by restricting or banning imports of Aussie goods including lobsters, wines, beef and coal.
The Aussie fell as low as 0.7701 on the news and was last down 0.3% at $0.7721 from Wednesday’s $0.7747.
Australian government bond futures rose as investors rushed to safety, with the 10-year contract jumping to the highest since mid-March to 98.36. The three-year contract was up half a tick at 99.735.
In the cash market, 10-year government bond yields fell to the lowest since March 1 to 1.639%. The New Zealand dollar fell in sympathy, and was off 0.3% at $0.7193, well above major chart support of $0.7116.
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