The Australian dollar turned tail on Wednesday as disappointing economic data further dimmed the chance of any rise in interest rates, while carnage in global share markets combined to pull bond yields to one-year lows.
The Aussie AUD=D3 stumbled back to $0.7317 and away from a four-month top of $0.7394 hit early in the week. That risked a break of chart support around $0.7285 and a retreat to $0.7200.
Doing damage was data showing the Australian economy grew just 0.3 percent in the third quarter, half the pace forecast by analysts. Downward revisions to the past meant annual growth slowed to just 2.8 percent.
"Today's result was underwhelming," said CBA economist Gareth Aird. "Consumer spending remains the key risk given weak income growth and dwelling prices that look set to continue deflating in Sydney and Melbourne."
"Trend-like growth won't be generating much in the way of upward pressure on prices and wages. Monetary policy will stay unchanged for the foreseeable future."
The Reserve Bank of Australia (RBA) has already kept rates at record lows of 1.5 percent since mid-2016 and the futures market
0#YIB: implies only a one-in-five chance of a hike by Christmas next year.That outlook boosted bond prices, with yields on 10-year debt AU10YT=RR dropping to a 12-month low of 2.48 percent. A few weeks ago they had been as high as 2.83 percent.
Three-year bond futures YTTc1 climbed 4 ticks to 98.000, implying a yield of just 2 percent, while the 10-year contract YTCc1 rose 3 ticks to 97.4950.
The bond market had already been rallying as concerns about a possible slowdown in the United States pulled Treasury yields sharply lower and inverted part of the yield curve.
That drop in yields had weighed on the U.S. dollar until the Aussie was undone by its own poor data.
Across the Tasman, the New Zealand dollar NZD=D4 eased to $0.6930, and off a fresh six-month high of $0.6969, as jitters grew about whether a U.S-China trade war could be averted.
An auction for dairy, New Zealand's key export, did show the first rise in prices for six months but economists warned it was unlikely to last.
"The NZD finally found some decent resistance up above $0.6950. With global sentiment turning, it will likely struggle to push higher," said Miles Workman, economist at ANZ Bank.
New Zealand government bonds
0#NZTSY= gained, sending yields 2.7 basis points lower at the long end of the curve.
