The Australian dollar skidded to one-month lows on Thursday as equities took another beating, overshadowing news the country’s central bank bought a record amount of the hapless currency last month.

The Aussie slid to $0.6344, having been as high as $0.6597 offshore before U.S. equities sank. It also fell to 60.37 yen, from a 63.86 peak, as investors fled all risky assets to the perceived safety of the yen and U.S. Treasuries.

Fears that a deep global recession is now inevitable and could soon spill over into corporate defaults, hammered stocks in the United States and Asia.

The S&P ended down over 6 percent while the Nikkei lost 6 percent and the local market shed 4 percent. The latter is now down 50 percent from its all-time peak hit just last November.

The extent of the slowdown underway globally was underlined by figures showing Japan’s exports to Asia suffered their first fall in seven years in October. That was bad news for Australia as Japan is the single largest buyer of its resources.

Given all this gloom, it was hard for the Reserve Bank of Australia (RBA) to offer much support, particularly as investors expect it to cut interest rates sharply next month.

Figures out Thursday showed the central bank had stepped in to buy A$3.15 billion in October as the currency collapsed to 60 cents amid global market turmoil.

The was the largest monthly purchase ever and, at the time, equalled almost 10 percent of its entire reserves.

“It’s a jaw-dropping number,” said Sean Callow, senior currency strategist at Westpac.

“It’s a lot more than we expected and even larger than it’s intervention during the Asian crisis,” he added. “It shows just how illiquid and difficult markets were in October.”

However, analysts felt its reserves of just $44 billion were far too small to hope to actually defend a particular level.

RBA Governor Glenn Stevens late Wednesday tried to be upbeat on the long-term outlook for Australia, and China for that matter. But he also left the door wide open for more cuts in interest rates.

Bill futures climbed yet further as the market priced in a rate cut of at least 75 basis points in the 5.25 percent cash rate at the December meeting, and further drastic easing to at least 3.5 percent next year.

Likewise, three-year bond futures jumped 0.110 points to a fresh all-time high of 96.370, while the 10-year contract rose 0.110 to 95.265. Treasuries were even stronger as U.S. consumer prices fell a steep 1 percent in October and the Fed signalled a willingness to ease again.

Two-year Treasury yields fell to their lowest since 1976 while the spread between Australian and U.S. 10-year yields widened out to 145 basis points.

—————(Snapshot at 4:10 p.m./0510 GMT)—————–

FUTURES CASH YIELD

90-DAY BILL (DEC) 95.760(+0.060) 4.54 (4.62)

3-YR BOND (DEC) 96.370(+0.110) 3.63 (3.85)

10-YR BOND (DEC) 95.265(+0.110) 4.73 (4.99)

AUD/USD 0.6442 (0.6467) US 10-YR 3.30 (3.66)

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AUD VS 2-YR 10-YR *AUD 3-YR/10-YR SPREAD

USD +219 (+229) +143 (+139) *FUTURES +1.100 (+1.115)

CAD +137 (+150) +122 (+137) *AUD 2-YR/10-YR SPREAD

NZD -150 (-141) -89 ( -77) *CASH +144 (+147)

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Source: http://www.afxnews.com

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