What goes up must come down” was the motto of the currency market this week, with high fliers such as the US, Australian and New Zealand dollars all falling back to earth, while the under-fire yen managed to eke out a rare weekly gain.

But while it was the high-yielding currencies that headed the decliners, there was no universal move away from the yield-seeking carry trades that have driven these currencies higher over the year. Sterling, another member of the high-yielding Anglo-Saxon currency club, made strong gains.

The New Zealand dollar’s decline was most dramatic, falling 1.2 per cent to $0.7037 against the greenback and 1.6 per cent to Y84.79 against the yen. As Westpac pointed out, the NZ dollar has behaved like Icarus, flying too close to the sun only for its wings to melt, even if it is hard to imagine a kiwi getting that high in the first place.

After soaring to 20-year highs in trade-weighted terms, the kiwi was undermined by a warning from Standard & Poor’s that New Zealand’s current account deficit, around 8 per cent of GDP, was “unsustainable”.

Then, on Thursday, a dovish central bank statement increased the chances that this week’s rate hike may be the last of the cycle, meaning the kiwi’s yield differential could now be eroded.

The Australian dollar fell 0.7 per cent to A$2.3169 against sterling as soft GDP data strengthened a perception that Aussie rates have also peaked.

The greenback, off 1.3 per cent at $1.7544 against sterling, 1 per cent at $1.1819 to the euro and 0.4 per cent at Y120.56 against the yen, suffered profit-taking after its strong run. Many analysts are pencilling in the prospect of a weaker dollar next year as the US current account returns to the fore.

The euro was helped by further signs of a gradual economic recovery in the eurozone, and talk that the recent rate hike may not prove a solitary affair.

The yen was a direct beneficiary of the antipodean sell-off. With Japan running interest rates of virtually zero, the yen had been used as a funding currency for many long-NZ or Aussie dollar trades.

BNP Paribas argued that sterling, which hit a fresh seven-year high of Y211.57 against the yen yesterday, was also a gainer from antipodean woes, with yield-hunters increasingly turning to the pound instead.