The Aussie dollar is getting hammered in early European trade as investors grapple with the continued crash in Shanghai stocks, further selloff in commodity markets in Asian trade today and fear that Sunday’s meeting of all 28 members of the EU will end with Greece exiting the Euro.
The dollar is currently trading below 74 cents against the US dollar, having just dipped below the lows of last night.
It’s starting to really accelerate downward now. Key to this move and the Aussie dollar’s future moves in the days ahead is that this is risk aversion based trade. For decades now traders have sold Aussie and bought Yen when they are worried about geopolitical or market events. There has been some dislocation in that trade during the mining boom. But, this afternoon the Aussie is getting hammered while the Yen is being bought aggressively. Aussie Yen is down 1.03% at 90.10. That five big figures below where it was two week’s ago.
That tells you all you need to know. Global traders are getting antsy and it won’t just be the Aussie that feels the selling.