The Australian dollar fell toward its weakest level since July 2010 as signs of slowing growth in China and the biggest devaluation of the Argentinian peso in 12 years sent demand for riskier assets tumbling.
Australia’s three-year bond yield slid by the most in four months amid increased demand for the relative safety of sovereign bonds. New Zealand’s currency fell for a fourth day before the nation’s central bank meets to decide on policy Jan. 30 with markets divided over whether Governor Graeme Wheeler will raise benchmark rates from a record-low 2.5 percent.
“The Aussie is very sensitive to perceptions of risk,” said Joseph Capurso, a Sydney-based strategist at Commonwealth Bank of Australia, the nation’s biggest lender. “If you’re an investor and thinking of which currency you want to short because of emerging-market problems, you sell the Aussie because it’s a liquid commodity currency with a current account deficit.” A short position is a bet a currency will fall.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.