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Australian & NZ dollars fly as Swiss decision downs euro
[SYDNEY] The Australian and New Zealand dollars scaled multi-month highs against a crestfallen euro on Friday, after the Swiss National Bank stunned markets by abandoning its cap on the franc.
The move saw the Swiss franc boast some of the biggest one-day gains in the history of currency markets, while the turmoil helped push Australian bond yields to the lowest on record.
It also battered the euro as investors wagered the decision meant it was almost certain the European Central Bank (ECB) would launch large-scale bond buying next week.
The euro struck a life-time low against the New Zealand dollar at NZ$1.4807, to last trade at NZ$1.4864.
Against the Aussie, the euro tumbled 2 per cent overnight in the biggest one-day drop in three-years to touch a low of US$1.4062. It was last at A$1.4125 and approaching the 2014 trough of A$1.3774.
The Aussie, however, hit a record low of 0.6072 Swiss francs after a 15 percent tumble overnight, which was the largest one-day loss in nearly 40 years. It was last at 0.7015.
The kiwi traded at 0.6686 Swiss francs, having plumbed a three-year trough of 0.5781.
The safe-haven yen was the other broad winner of the wild session, with the Aussie dipping to 95.55 yen, from Thursday's high near 97.00. The kiwi dropped to 90.97 yen from a high of 91.90 overnight.
With all the action on the euro and Swissy, the Antipodean currencies proved resilient against the US dollar. The Aussie was steady at US$0.8214, having managed to reach a one-month high of US$0.8295 overnight.
Moving average studies are bullish with major chart resistance at $0.8370 and support at US$0.8140.
The volatility in markets was seen cleaning out bets on further kiwi weakness, sending it to a six-week high of US$0.7890. The kiwi was last at US$0.7835, with support at US$0.7750 and resistance at US$0.7900.
New Zealand government bonds were strongly bid sending yields as much as 14.5 basis points lower at the long end of the curve.
Australian government bond futures exploded higher following a meteoric rally in US Treasuries, with the three-year bond contract up 10 ticks at 97.970. The 10-year contract jumped 14 ticks to 96.5100, having touched record highs of 97.5550.
Likewise, 10-year cash yields dropped to a historical trough of 2.54 per cent, a hair above the cash rate of 2.5 per cent.