The Australia dollar fell off a two-year peak on Friday after a top central banker said there was no automatic reason for rates to rise after a recent outbreak of hawkishness by global policymakers. The Aussie sank nearly 1 percent to as low as $0.7875. It touched a high of $0.7992 earlier in the week but was rebuffed by stiff chart resistance at 80 US cents.
"Just as the policy rate in Australia did not need to decline to the very low levels seen in other parts of the world, the fact that other central banks increase their policy rates does not automatically mean that the policy rate here needs to increase," Reserve Bank of Australia (RBA) deputy governor Guy Debelle said in a speech in Adelaide.
The Aussie also crashed 1 percent on its New Zealand counterpart to NZ$1.063. Across the Tasman Sea, the New Zealand dollar hit its highest levels since September last year at $0.7429, with analysts saying there was room for more upside. However, the kiwi was vulnerable to profit-taking at these levels, they added.
The currency was further underpinned by comments from New Zealand Finance Minister Steven Joyce who told Bloomberg in an interview that he is not worried about the strength of the local dollar. The kiwi fell as far as $0.7261 this week on softer inflation numbers.
New Zealand government bonds were higher across maturities , with 10-year yields down 3.5 basis points. Australian government bond futures jumped, with the three-year bond contract rising 7 ticks to 98.000. The 10-year contract gained 5.5 ticks to 97.315.