The Australian dollar has risen Wednesday, buying 71.34 US cents from 71.22 US cents on Tuesday.

The local currency has been cowed by global growth concerns, while bonds extended their recent rally to drive many yields to all-time lows.

On Monday, the Aussie dollar was stuck 70.75 US cents, having failed to hold last week’s brief top at 71.68.

A general rush to safety mostly benefited the Japanese yen, slapping the Aussie down almost 1.2 per cent on Friday to last stand at 77.85.

The slide followed disappointing manufacturing surveys from across the globe, and especially Europe, which weighed on risk sentiment and prices for industrial commodities, including copper.

“Our AUD short term model suggest fair value is currently at 71.86, so in spite of Friday’s risk aversion, the AUD/USD still looks a little bit undervalued,” said Rodrigo Catril, a senior FX strategist at NAB.

“Sharper declines in commodity prices and a VIX at least above 25 are probably needed for the AUD/USD fair value to sink below 70.00.”

He was referring to the volatility index, which jumped almost three points to 16.48 on Friday.

The run of poor economic data globally had also seen inflation expectations crash and added to downward pressure on the longer-end of the yield curve.

Yields on 10-year Australian bonds have dived almost 20 basis points in just a week to hit record lows at 1.77 per cent.

New Zealand’s 10-year bonds were also at that historic milestone with a drop to 2.008 per cent.

The 10-year futures contract added another six ticks on Monday to reach an all-time peak of 98.2250.

Yields on Australian three-year paper sank to just 1.40 per cent, the lowest since August 2016.

That was also under the 1.5 per cent cash rate, a clear sign markets are wagering on a rate cut form the Reserve Bank of Australia.

Futures are almost fully priced for a quarter-point easing by September, though that timing was pushed out a little last week when data showed the jobless rate unexpectedly dipped to 4.9 per cent in February.

The RBA has so far put its faith in the resilience of the labour market and it would likely take a sharp rise in unemployment to convince it further stimulus was needed.

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