Australian dollar weakens as iron ore slump

THE Australian dollar is weaker as iron ore prices fall and financial market volatility continues.

Pile of Australian dollar coins. $1. One dollar. Stack.

THE Australian dollar is weaker as iron ore prices fall and financial market volatility continues.

At 0700 AEDT on Friday, the local unit was trading at 87.56 US cents, down from 87.92 cents on Thursday.

A sharp drop in iron ore prices was the main factor hampering the local currency, Bank of New Zealand currency strategist Raiko Shareef said.

“The Aussie dollar is in an interesting space because it’s the weakest performing major currency overnight by quite a margin,” he said from Wellington.

“Iron ore prices are down by about 2.7 per cent ... that would have reduced any positive feelings towards the Aussie dollar.” More financial market volatility was also diminishing the Australian dollar’s advantage as a currency from a higher interest rate economy, he added.

The Australian dollar had also failed to capitalise on the Federal Reserve Bank of St Louis president James Bullard’s comment that the ending of the US Fed’s quantitative easing program should be delayed until December, which had weakened the greenback.

Currency snapshot at 0700 AEDT on Friday

One Australian dollar buys:

* 87.56 US cents, from 87.92 cents on Thursday

* 93.14 Japanese yen, from 93.30 yen

* 68.39 euro cents, from 68.60 euro cents

* 110.29 New Zealand cents, from 110.04 NZ cents

* 54.42 British pence, from 55.05 pence

One euro buys:

* 128.04 US cents, from 128.16 cents

* 136.19 Japanese yen, from 136.00 yen

One US dollar buys:

* 106.37 Japanese yen, from 106.16 yen

(*Closes taken at 1700 AEDT previous local session)

Source: IRESS

Originally published as Australian dollar weakens as iron ore slump