Aussie Dollar Gains Despite Risk Aversion in Stock Markets; Dollar Slips

On Thursday,  The Aussie dollar gained  even after global markets fell sharply, while the U.S. dollar, usually considered a safe-haven asset, unexpectedly slipped despite the slide in stocks.

While China’s Shanghai Composite also slumped to four-year lows after U.S. stocks suffered their worst one-day drops in eight months overnight, Japan’s Nikkei 225 was down 4%.

The U.S. dollar index, which tracks the greenback against a basket of other currencies, slipped 0.2% to 94.96 by 1:42 AM ET (05:42 GMT).

 Stuart Ritson said “In an environment where people are concerned about rising volatility, the dollar tends to do well – especially versus higher-risk currencies such as the Aussie and Canadian dollar,” head of Asian rates & foreign exchange at Aviva (LON:AV) Investors.

Ray Attrill, head of foreign exchange strategy at NAB said “There seems to be a disconnect and there is no obvious explanation for why the dollar did not fare better on a risk-off day.

The AUD/USD pair gained 0.4% to 0.7075. While not a directional driver, RBA assistant governor Luci Ellis said at the Melbourne Institute’s Economic and Social Outlook Conference that policy of the central bank needs to be expansionary to help the economy absorb spare capacity in the labor market.

The safe-haven Japanese yen strengthened as the USD/JPY pair slipped 0.1% to 112.17.

The USD/CNY pair traded 0.1% higher to 6.9322 as the People’s Bank of China (PBOC) set the yuan reference rate at 6.9098 vs the previous day’s fix of 6.9072./investing.com

 

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