The Australian and New Zealand dollars hunkered near multi-month lows on Thursday as concerns about sliding asset prices in China clouded the outlook for both global growth and home-grown exports.
Speculators have been selling the currencies as a liquid proxy for the Chinese yuan CNH=D3 which has skidded to six-month lows amid mounting Sino-U.S. trade tensions.
The Aussie dollar AUD=D3 was huddled at $0.7340, having shed almost 0.7 percent overnight to $0.7323. It briefly broke the $0.7329 low from May last year and risked a retracement all the way to a $0.7160 nadir from December 2016.
There were plenty of bearish milestones for the kiwi too. It was down at $0.6784 NZD=D3 , after sliding 0.8 percent on Wednesday to its lowest since June 2016 at $0.6778.
Dealers reported some support around $0.6680 but a bearish chart backdrop meant the next likely target was a $0.6676 trough from May 2016.
The kiwi has been undermined in part by New Zealand's widening interest rate gap with the U.S. Federal Reserve, which still aims to hike rates another two times this year.
The Reserve Bank of New Zealand (RBNZ) on Thursday warned of looming risks to the outlook such as slowing growth and global trade frictions, signalling its resolve to maintain record-low rates for some time.
The central bank held the official cash rate at 1.75 percent for the 11th straight review as it struggles to lift tepid inflation to 2 percent, the centre of its target band.
It also noted that recent domestic growth figures had been softer than expected and that fiscal stimulus looked set to be slightly lower and more drawn out than first thought.
"There was a slight dovish tilt to the one-page statement, as the Bank tweaked language and acknowledged recent developments," said Kiwibank Chief Economist Jarrod Kerr.
"We maintain our view that the RBNZ is at least a year away from contemplating rate hikes."
The dovish tone combined with safe-haven flows to boost New Zealand government bonds
0#NZTSY= , where yields fell by 2 to 4 basis points.Yields on Australian 10-year government bonds AU10YT=RR fell to a three-month low around 2.58 percent amid the global shift from risk. They had been as high as 2.94 percent as recently as mid-May.
The three-year bond futures YTTc1 firmed 2.5 ticks to 97.925, while the 10-year contract YTCc1 added 2 ticks to 97.3850.
