Aussie Drops with Global Equities

The Australian dollar slumped as Moody’s Rating Agency lowered credit ratings of several banks and global stocks dropped, giving evidence that markets are currently in a risk-off mode that is negative for commodity currencies.
The Standard & Poor’s 500 Index dropped as much as 2.2 percent yesterday, demonstrating the biggest daily fall since June 1. The Stoxx Europe 600 Index was down 0.5 percent.
Moody’s cut ratings of 15 banks, spurring risk aversions on markets. The rating agency explained:

All of the firms included in this rating review have, in our view, significant exposure to the volatility and risk of outsized losses (i.e., tail risk) that are inherent in capital markets activities.

Earlier, reports showed that manufacturing sector of China, the eurozone and the United States experienced slowdown this month. The negative data slashed appeal of currencies that are related to commodities.
AUD/USD dropped from 1.0189 to 1.0035 before trading at 1.0050 as of 1:10 GMT today. EUR/AUD rose from 1.2466 to 1.2494, following the earlier drop to 1.2428, yesterday and stayed near that level today. AUD/JPY fell from 81.00 to 80.54 on the previous trading session, reaching the high of 81.53 intraday, and remained near yesterday’s close at the current session.

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