Australian and New Zealand dollars give ground

The Australian and New Zealand dollars dropped to one-week lows on Friday as investors avoided risky assets for the safety of bonds after dire US data raised the spectre of world recession while concerns about European banks mounted. Australian government bonds were a big beneficiary, with 10-year yields diving to 4.24 percent, its lowest since March 2009. That is a level way below the 4.75 percent cash rate and an inversion that sometimes comes with fears of recession.
The Aussie dollar was down half a cent to $1.0343, after testing a session low of $1.0316. That was a relatively modest given a general flight to safety sent regional stocks tumbling by more than 6 percent, prompting rallies in spot gold and Treasury bonds. The New Zealand dollar pared most of the session's losses, having hit a one week-trough of $0.8176. It last traded at $0.8200, from $0.8350 in late local trade on Thursday.