The Australian and New Zealand dollars nursed hefty losses on Thursday after the US Federal Reserve sounded less dovish on future rate hikes than investors had wagered on, sending equities and risk assets into a spin. The kiwi took an additional knock after data showed the domestic economy slowed by more than expected in the third quarter, while the Aussie found support from a solid jobs report.
The kiwi dollar was huddled at $0.6753, having shed 1.2 percent overnight in the wake of the Fed's latest rate rise. Chart support now lies at $0.6706. The Aussie idled at $0.7112, after losing 1 percent overnight and touching a six-week trough of $0.70875. It has major support from $0.7040 to $0.7020.
Yet local bonds extended their recent surge amid speculation the Fed's commitment to "some" more rate rises would depress economic growth and inflation, which was already under downward pressure from sliding oil prices. Australian 10-year yields hit their lowest since mid-2017 at 2.35 percent, a world away from the November peak of 2.83 percent. The next target is a 2.33 percent low from 2017.
Three-year bond futures also reached their highest since mid-2017 and were last at 98.135. The 10-year contract added another 2 ticks to 97.6300. New Zealand's 10-year yield dived to 2.405 percent, the lowest since late 2016 and down 47 basis points in little more than a month.