Adding to downward pressure, China’s latest inflation data, also on Wednesday, came in weaker than expected.
The country’s consumer price index slowed slightly to 1.4 per cent in July from a year earlier, missing market expectations, pressured by a 1.1 per cent annual fall in food prices. The producer price index (PPI) rose 5.5 per cent last month from a year earlier, unchanged from June.
Traders said the fact the dollar sold off in reaction to the Chinese data showed that sentiment towards the currency has soured.
“The aggressive sell off after Chinese CPI missed the mark was a combination of bad timing and low liquidity rather than anything else,” said OANDA head of trading Stephen Innes.
Rising geopolitical tensions added to the gloom, but it wasn’t just the Aussie that slid in the wake of the standoff between the US and North Korea.
There was a determined shift by investors into the safe-haven currencies of the Swiss franc and Japanese yen.
The Swiss currency recorded its biggest one-day gain against the euro since January 2015. The greenback was down 1.1 per cent against the franc, its worst drop in more than six weeks.