The Australian dollar continues its journey south and hit a new low at the 0.75 handle, a level long sought by the RBA. Can it break below this round number?
Not for the first time this week, falls in commodity prices drive the Aussie lower. In addition, a new factor emerged: talk of a credit rating downgrade.
Prices of iron ore have extended their falls that began a long time ago. Worries about Chinese demand, as reflected in the independent HSBC manufacturing PMI, have added fuel to the fire.
Credit rating: JP Morgan warns that the government’s “broken promises” regarding balancing its books could lead to a credit rating cut.
At the same time, the USD is not really shining, especially due to yesterday’s weak data points. And while the greenback is losing some ground against the euro, the pound and the yen, it is moving up against the Aussie.
Another beneficiary of this A$ drop is the kiwi: AUD/NZD is edging a step closer to parity and is also at uncharted territory. If we look at AUD/USD and NZD/USD, we can see that less than 100 pips divide the antipodean currencies against the greenback.
More: AUD At Risk Of Limited Lows – BofA Merrill
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