Australia, NZ dollars on defensive as risk rout sparks bond rally

The Australian and New Zealand dollars weakened against some safer currencies on Friday as a global equity sell-off prompted investors to seek the relative safety of bonds, Business Recorder reported. Australian 10-year bond yields fell 10 basis points to 5.164%, while the Australian dollar was little changed at $0.7016 and the New Zealand dollar slipped 0.4% to $0.5683. The report linked pressure on technology shares to concerns over the capital required for artificial intelligence and the possibility of slower data-centre investment.

Brent crude rose above $113 a barrel, while markets reduced expectations of further Federal Reserve tightening by more than 20 basis points. In New Zealand, firm core inflation and a weaker currency strengthened expectations of a rate increase next week, with markets pricing a 95% chance of a quarter-point rise to 3.0%. Citi and Westpac analysts also shifted their forecasts towards a hike, although their views differed on how high rates could reach next year.