The Australian dollar was hanging on grimly on Thursday as disappointing retail sales added to already feverish speculation about rate cuts, driving hefty gains for bonds and debt futures. The Aussie dollar touched a two-month low at $0.7020 at one stage before finding enough support to steady at $0.7038. It remains well below the week's top of $0.7118.
It was aided by figures showing Australia boasted its second biggest trade surplus on record in January at A$4.5 billion ($3.17 billion). That blew away forecasts of A$3.0 billion and came on top of a healthy 5 percent jump in exports, particularly of gold. Yields on three-year government debt, the most liquid of the short-term bonds, have dived 10 basis points to 1.588 percent, near their lowest since late 2016 and only just above the cash rate.
Overnight indexed swaps, which track expectations for official rates, have dropped to 1.65 percent for a year ahead, well under the current 1.75 percent cash rate. The kiwi dollar likewise slipped in the wake of the Aussie to hit a three-week low of $0.6753, before steadying at $0.6781. New Zealand government bonds gained, sending yields 4.5 basis points lower at the long end of the curve.