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Australia, NZ dollars come off their lows, sentiment still shaky

[SYDNEY] The Australian and New Zealand dollars nudged up on Wednesday from multi-week lows but sentiment was still jittery following the recent sell-off in global markets.

The Australian dollar was last down 0.3 per cent at US$0.7881, but well above a one-month low of US$0.7835 touched on Tuesday when a rout in global stock markets sparked a flight to safe havens.

The Aussie is often sold during times of stress because Australia has an open economy that is leveraged to commodity prices and global growth and runs a perennial current account deficit.

For these reasons its biggest fall was versus the safe-haven Japanese yen, against which it slid to a two-month trough of 84.99 yen. It was last down 0.6 per cent at 86.09 yen.

The story was much the same for the New Zealand dollar, which was down 0.4 per cent at US$0.7311. It went as low as US$0.7257 on Tuesday, a level not seen since Jan19.

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A solid report on New Zealand's labour market could not lift the currency.

New Zealand's jobless rate fell to a nine-year low at the end of 2017 as employment growth remained surprisingly strong, but not enough to change the Reserve Bank of New Zealand's intention keep interest rates at the current record low for some time.

Wednesday's data came a day ahead of a monetary policy review, in which the RBNZ is expected to project the official cash rate will remain at 1.75 per cent through this year.

New Zealand government bonds gained, sending yields about 5 basis points lower at the short end of the curve.

Australian government bond futures were mixed, with the three-year bond futures contract flat at 97.840. The 10-year contract slipped 2 ticks to 97.160.


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