The Australian dollar was picking up the pieces on Thursday after a torrent of automated selling against the yen sent it plunging to multi-year lows on a host of major currencies. The Aussie suffered some of the largest intra-day falls in its history amid a drought of liquidity and a cascade of computerised sales.
At one point it was down 5 percent on the yen and almost 4 percent on the US dollar, before clawing back much of the losses as trading calmed and humans took charge. The Aussie tumbled as far as 72.26 yen on Reuters dealing, a level not seen since late 2011, having started around 75.21. When the smoke cleared, buyers returned and it was last changing hands at 74.40 yen.
The selling spilled over into other crosses and the Aussie sank to as deep as $0.6715, the lowest since March 2009, having started around $0.6984. Again, bargain hunters emerged and it was last at $0.6922. The New Zealand dollar also took an initial beating on the yen to hit its lowest since late 2012, though whether any trades were done around those levels was hard to say.
The kiwi fared better on the US dollar, easing to $0.6621 from $0.6654 late Wednesday. Futures for the 10-year bond jumped 12 ticks to 97.8300, having been up as much as 25 ticks at one stage. The three-year bond contract rose 7.5 ticks to 98.305, implying a yield of just 1.695 percent. Concerns about global growth also led the futures market to price in slightly more chance of a cut in interest rates by the Reserve Bank of Australia (RBA). Yet the Aussie's decline is providing a boost to the economy that makes it less likely the RBA will have to take the drastic step of cutting rates from already record lows.