Australian dollar is lower

THE Australian dollar has been dragged down as traders remain cautious about how far China’s stockmarket will unwind.

THE Australian dollar has been dragged down as traders remain cautious about how far China’s stockmarket will unwind.

At 0700 AEST on Wednesday, the currency was trading at 71.30 US cents, down from 71.82 cents on Tuesday.

Overnight, Shanghai extended its worst rout in almost 20 years, prompting the People’s Bank of China to unleash fresh stimulus measures as global markets recovered slightly.

“Regional equity markets managed to hold on or even appreciate slightly yesterday, that allowed the Aussie to head back up above 72 US cents,” Bank of New Zealand currency strategist Raiko Shareef said.

“But we’re still in an environment of uncertainty as to where global equities go next and how investors are in terms of risk appetite.” Mr Shareef said the Aussie had now taken a lead from US sharemarkets, which faded after staging an initial turnaround. US stocks finished lower for the sixth straight session, with the Dow posting another triple-digit decline after a morning rally fizzled.

“We’re not clear of the woods yet in terms of how far the unwind in China is going to extend and the authorities’ capabilities to stop that,” he said.

CURRENCY SNAPSHOT AT 0700 AEST ON WEDNESDAY

One Australian dollar buys:

* 71.30 US cents, from 71.82 cents on Tuesday

* 84.73 Japanese yen, from 85.56 yen

* 61.89 euro cents, from 62.15 euro cents

* 110.14 New Zealand cents, from 110.67 NZ cents

* 45.44 British pence, from 45.52 pence

(*Currency closes taken at 1700 AEST previous local session)

Source: IRESS