The Australian and New Zealand dollars slipped for a third straight session on Friday as the escalating war of words over North Korea spooked investors toward safe harbours including the yen and Swiss franc. With stocks and equities falling across Asia and volatility on the rise, funds pared back riskier positions in carry trades which typically favour the higher-yielding Antipodeans.
The Aussie lost 0.4 percent on its US counterpart to stand at $0.7845, bringing its loss for the week so far to 1 percent. It was down 2.6 percent on the week against the Swiss franc and 2.5 percent on the yen. Japan is the world's biggest creditor nation and there is an assumption that investors there will repatriate funds at times of crisis.
"Risk aversion has picked up though many will argue that we have heard it all before," said Sean Callow, a senior currency strategist at Westpac. The New Zealand dollar was down at $0.7276, and heading to a loss for the week of 1.9 percent. It was also down a hefty 4.7 percent on the yen and 4 percent on the Swiss franc.
The currency took an added hit on Thursday when a top official at New Zealand's central bank said they were becoming more uncomfortable with the strength of the currency and the market should recognise that. The shift to safety was a boon for Australian government bonds, however, which are among the few in the world with a triple A rating.
The Aussie three-year bond contract climbed 5 ticks to 98.080, while the 10-year contract jumped 8 ticks to 97.4250. Yields on the cash 10-year bond fell to their lowest in five weeks at 2.585 percent. New Zealand government bond yields were as much as 4 basis points lower at the long end of the curve.