The Aussie dollar fell below 87 cents in Asia today, trading down to a low of just 0.8682. That’s less than half a cent above the low for 2014 in January this year.
The key driver appears to be both concern about the protests in Hong Kong, and the impact that this could have on market sentiment. That combination is never good for the Aussie and the added confirmation from the RBNZ that it had intervened in the Kiwi market, selling New Zealand Dollars in August, also highlighting the downside risk that is continuing to emerge for Aussie dollar traders.
More tellingly though it is the buying support for the US dollar in Asia and early Europe today, driving the Aussie and other markets as traders sell everything against the ‘Buck’. Gold is down at $1,217, USDJPY up at 109.59 and the Euro is under pressure at 1.2675.
The question for me is whether this is the pessimistic crescendo required for the Aussie dollar to find a base or is this the start of a move which will sweep the US dollar to even higher levels this week?
With only half a days trade for the week so far it’s too early to tell, but today’s price action is often the precursor to a reversal – exactly the pessimism for non-USD assets or optimistic zenith for the US dollar itself.
Longer term though the trend that have emerged over the past few weeks look likely more sticky than any currently selling.