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The Australian dollar has briefly tumbled below 68 US cents, its lowest level in 10 years.
Markets at 8:10am (AEDT):
- ASX SPI futures +1.4pc at 5,564, ASX 200 (Wednesday's close) -1.6pc at 5,558
- AUD: 69.96 US cents, 55.47 British pence, 61.65 Euro cents, 76.36 Japanese yen, $NZ1.05
- US: Dow Jones +0.1pc at 23,346, S&P 500 +0.1pc at 2,510, Nasdaq +0.5pc at 6,666
- Europe: FTSE 100 +0.1pc at 6,734, DAX +0.2pc at 10,580, CAC -0.9pc at 4,689, Euro Stoxx 50 -0.3pc at 2,992
- Commodities: Brent crude +2.2pc at $US54.96/barrel, spot gold -0.1pc at $US1,281.06/ounce
It was only yesterday that the local currency was trading at around 70.5 US cents.
That was before traders panicked over the latest Chinese manufacturing figures, which confirmed the US-China trade war's damage to its economy.
A Chinese private sector survey revealed factory activity contracted for the first time in 19 months, with the Caixin Manufacturing Purchasing Managers' Index (PMI) for December dipping to 49.7.
The dollar was also dragged lower because of a surging US greenback, after weaker European Union (EU) economic figures led to investors fleeing to the safe haven US currency.
In particular, the euro zone's manufacturing PMI dropped to a two-year low of 51.8.
Furthermore, sentiment was dented after the price of Australian commodities, copper (-2.1 per cent) and aluminium (-2.7 per cent), tumbled heavily.
Analysts say these factors are pointing to a slowdown in global economic growth.
"Despite the new year, there is a continuation of the same issues that have plagued 2018 and the recent manufacturing numbers from China and Europe just add to the tension," Ryan Nauman, market strategist at Informa Financial Intelligence, said.
For a few minutes, the Australian dollar was trading as low as 67.3 US cents at 9:45am (AEDT).
It has since risen back to a three-year low of 69.35 US cents at 4:20pm (AEDT).
It has dropped by about 14 per cent since January 2018, when it was worth 81.09 US cents.
The US Federal Reserve has since raised its federal funds rate four times (+1 per cent) — while Australia, which has traditionally had higher yields than America, maintained record-low interest rates.
The higher interest rates on US currency have made it a more attractive investment compared to the Australian currency.
Volatile start for stocks
Wall Street struggled for direction in another volatile day. Its main indices drifted in and out of negative territory — several times throughout the day.
The Dow Jones index closed 19 points higher, up 0.1 per cent, to 23,346.
At its worst point of the day, the Dow had tumbled by nearly 400 points.
The benchmark S&P 500 finished with a slight gain, up 0.1 per cent to 2,510.
The tech-heavy Nasdaq rose 0.5 per cent to 6,666.
Among the weakest performers, Tesla sank 6.8 per cent after the electric car maker delivered fewer-than-expected Model 3 sedans in the fourth quarter.
Tesla also and cut prices for all its vehicles in the US in response to the loss of a green tax credit.
Energy was the best performing sector on the S&P, surging 1.5 per cent.
It was bolstered by a recovery in oil markets overnight, after Brent crude jumped 2 per cent to $US54.90 a barrel.
ABC/Reuters
Topics: business-economics-and-finance, markets, stockmarket, currency, australia
First posted