The Australian and New Zealand dollars were stuck near multi-month lows on Tuesday as China's reprisal for US tariffs shook markets globally and stoked speculation about interest rate cuts at home. The Aussie dollar was pinned at $0.6952, having sunk 0.8 percent on Monday to as deep as $0.6941, the lowest since the flash crash of early January. The last time the currency spent more than a day down at these levels was in early 2016.
The kiwi regained just a little ground to $0.6586, but remained uncomfortably close to its recent six-month trough of $0.6505. Both dropped on the safe-haven Japanese yen, with the Aussie shedding 1.4 percent overnight to its lowest since January at 75.70. The losses came after Beijing announced a retaliatory tariff move against US imports, following the United States' move last week to sharply increase levies on Chinese imports. Offshore risks kept New Zealand government bonds well bid, with two-year yields not far from record lows at 1.425 percent.
Australian government bond futures firmed, with the three-year bond contract up 2 ticks at 98.770. The 10-year contract rose 2.5 ticks to 98.2900.