The downgrade of the US credit rating on August 5 hurt commodity currencies and the Australian dollar was among the ones hit hardest by the rating agency’s decision. The Australian currency extended its drop today.
Risk aversion sentiment was already in place before the cut of the US rating and it has strengthened following the S&P move, having its negative impact on markets. The Standard & Poorâs 500 Index slumped as much as 3.8 percent. The MSCI Asia Pacific index of regional shares fell 2.5 percent. The Thomson Reuters/Jefferies CRB Index of raw materials slid 1.8 percent.
A poor performance of currencies linked to growth can be expected in such an unfavorable environment. But the Aussie (the common nickname of the Australian currency) performed exceptionally bad. The currency slipped for five consecutive sessions against the euro. Against the US dollar and the Japanese yen the Aussie fell for eight sessions in a row.
AUD/USD slumped 1.0421 to 1.0265 as of 19:12 GMT today. Meanwhile, EUR/AUD climbed from 1.3826 to 1.3863, following the drop to the daily low of 1.3665. AUD/JPY tumbled from 81.28 to 79.56.
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