AUD/USD drops to 0.8980 as Volatility Climbs to 6-Week High

The Australian dollar slid versus all 16 major counterparts as volatility headed for the highest close in six weeks, damping demand for the currency.

The Aussie weakened against its U.S. and Japanese peers as investors continued to sell Asian emerging-market holdings and before a report that may show home-price gains in the world’s biggest economy remained near a seven-year high, boosting the case for a reduction in Federal Reserve stimulus. New Zealand’s currency snapped a gain from yesterday that was the most in almost two weeks after a global decline in equities curbed appetite for higher-yielding assets.

“Increased volatility historically has placed some downward pressure on the Aussie,” said Peter Dragicevich, a currency economist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender. “In terms of what’s contributed to it, you’ve got concerns in the emerging-market space. And the other factor is that historically, volatility does pick up in and around large turning points in U.S. monetary policy, and we are on the cusp of one at the moment.”

Bloomberg

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