The Australian and New Zealand dollars were fighting a rearguard action on Wednesday as a rout in global share markets and a new broadside on China-U.S. trade sent investors to the cover of safe haven currencies.
The Aussie dollar AUD=D3 was down at $0.7213, having shed 1.1 percent overnight as investors fled currencies leveraged to commodity prices and global growth.
The failure at a top of $0.7338 early in the week now risked a test of major support around $0.7164. It also sank 0.9 percent against the yen overnight and was last wallowing at 81.27 yen AUDJPY= .
The kiwi dollar NZD=D3 was pinned at $0.6787, after toppling 0.7 percent on Tuesday, but found some support around $0.6780. It had been as high as $0.6883 last week before the slide in U.S. stocks accelerated.
Wall Street fell sharply for a second straight session on Tuesday and strains appeared in U.S. corporate debt and junk bond markets.
Adding to the gloom was a fresh scare over China-U.S. trade as the White House on Tuesday said Beijing had failed to alter its "unfair" practices.
The report seemed to pour more cold water on hopes U.S. President Donald Trump and Chinese President Xi Jinping would find some sort of truce at a G20 meeting next week.
"Comments out of the U.S. don't seem to be calming the trade feud," said Rakuten Securities Chief Operating Officer Nick Twidale. "The Aussie looks set to suffer more today in it's role as a risk proxy and expect more volatility in the emerging market space."
"There are some signs that cracks in the U.S. economy are starting to show, mainly in the credit market, and this is adding to all the geo-political and trade factors that are already causing concern," he said.
Worries about the economic outlook in China had also slugged prices for iron ore and coking coal, two of Australia's biggest export earners.
New Zealand's main export, dairy, had already been under pressure after falling for seven auctions in a row.
The latest sale overnight saw the Global Dairy Trade (GDT) Price Index drop 3.5 percent, partly due to expectations of strong supply.
Australian government bond futures were little changed, with the three-year bond contract YTTc1 flat at 97.845. The 10-year contract YTCc1 eased one tick to 97.2900.
Yields on New Zealand government bonds
0#NZTSY= were around one basis point higher across the curve.
