Australian Dollar Drops As Investors Shun Risk Assets

Australian Dollar Drops As Investors Shun Risk Assets

The Australian dollar fell sharply overnight to trade further below parity against the US currency, with little relief in sight as investors shun risky assets. In afternoon US trading, the Australian sank more than 1 per cent to 98.02 US cents, before dropping further in early Australian trade to 97.92 US cents. So far in May, the Aussie has shed about 6 per cent against the greenback. The Aussie’s reversal of fortune in recent weeks was magnified when its 50-day moving average fell below the 200-day moving average on Friday to form a “death cross”, often seen as an indication of a weak trend.

John Kicklighter, currency strategist for DailyFX said, “The fundamental drive behind the Aussie dollar’s incredible tumble these past three months has been an efficient three-part offensive: fading interest rate expectations, risk trends and Chinese growth forecasts. When one or two ease off the pressure, the third has consistently stepped in to keep the sellers engaged,”