That only fuelled concerns about the Sino-US trade dispute, and the latest twist with Huawei. Yet the Aussie edged back up to $0.7218 as the session wore on and the US dollar came under broad pressure as investors scaled back expectations on rate hikes following Friday's softer reading on November payrolls. The New Zealand dollar, likewise, pared its losses to stand at $0.6886, having been down as far as $0.6841 at one stage. Both the Aussie and kiwi fared worse against the safe haven yen, having taken a beating last week as global equity markets cratered. Local bond markets again tracked the rally in Treasuries. Yields on Australian 10-year debt fell to their lowest since June last year at 2.43 percent, a world away from the November peak of 2.83 percent. New Zealand 10-year yields dropped to their lowest since October 2016 at 2.455 percent.
Futures for Australian three-year notes hit their highest since November 2017 and were last up 1 tick at 98.075, implying cash yields under 2 percent. Markets have gone from pricing in three rate rises next year to less than one, while 10-year Treasury yields have dived 40 basis points in just a month.
"The US dollar is under the shadow of any resolution to the ongoing trade disputes, increasingly dovish Fed language, and slowing global growth - that set of factors has created a wall of worry offshore," said Kiwi Bank chief economist Jarrod Kerr. "In summary this is a USD story."