The Australian dollar fell to a two-week low against the Japanese yen on Friday as a fresh bout of risk aversion prompted investors to cut their exposure to higher-yielding currencies.
The Aussie failed to find support from a broadly weaker US dollar, which hit a record low against the euro after weak US economic data and corporate earnings backed the case for an interest rate cut by the Federal Reserve later this month.
"It was definitely a fresh round of risk aversion which hurt the Aussie against the yen," said Jonathan Cavenagh, currency strategist at Westpac. "Having said that, the Aussie is still a good buy on dips though we could see it test 88 US cents or thereabouts."
Regional stock markets eased and financial shares were hit after Bank of America unveiled a larger-than-expected drop in quarterly profit. The no. 2 bank in the US was hurt by mounting credit losses and dismal investment banking earnings.
That was the latest in a string of poor results from major US banks this week. Adding to the downward pressure in Aussie/yen were expectations Group of Seven finance ministers and central bankers would call for a loosening in China's yuan policy at a meeting in Washington DC starting later on Friday.
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