Australia, New Zealand dollars soar as greenback sinks

[SYDNEY] The Australian dollar rocketed past a key barrier at 80 US cents, triggering a wave of stop losses on Friday while its New Zealand cousin soared to a two-week high as fading expectations of a US rate hike sank the greenback.

The US dollar index slipped 0.6 per cent to its lowest since January 2015 after New York Fed president William Dudley sounded less confident about US rate rises in the face of weak inflation.

The Australian dollar climbed the most in 3-1/2 weeks to hit US$0.8110, the highest since May 2015. It is up 1.77 per cent for the week, on track to record its best performance since mid-July.

The New Zealand dollar jumped 1.4 per cent to US$0.7331, the highest since Aug 22. For the week, the kiwi has risen 3.8 per cent after five straight weeks of losses.

"Just seems to be mix of several things - US dollar weakness for one. We've also just got news of an earthquake in Mexico. That's also having a play as traders prefer yen for safe haven," said Stuart McDonald, a Melbourne-based forex dealer at IG Markets.

"I think the focus now is on US dollar weakness. It just seems to be gaining some real traction."

An earthquake of magnitude eight struck off the southern coast of Mexico late on Thursday, the US Geological Survey (USGS) said, shaking buildings across the centre and south of the country and sending people running into the streets in the capital.

Mexico's civil protection agency said it was the strongest earthquake to hit the country since a devastating 1985 tremor that toppled buildings and killed thousands.

The US currency was already under pressure on worries about the impact of hurricanes Irma and Harvey on the world's largest economy, stoking safe-haven demand for government debt and the yen.

New Zealand government bonds gained, sending yields 5.5 basis points lower at the long end of the curve.

Australian government bond futures rose, with the three-year bond contract up three ticks at 98.020. The 10-year contract climbed 8.5 ticks to 97.45.

REUTERS