The Australian dollar / US dollar exchange rate is 0.639% lower on the day with 1 AUD = 1.0571 USD at 10 AM in London. The pound / Australian dollar exchange rate is 0.103% higher with 1 GBP = 1.5251 AUD. The euro / Australian dollar exchange rate is 0.282% higher with 1 EUR = 1.3373 AUD. The relationship between the equity markets, commodity markets and the Australian dollar remains firmly intact. Investors have been selling these assets this morning in line with a plethora of bad news events that have swayed investor sentiment into negative territory. Friday’s US session once again saw the AUD fall victim to the ‘risk off’ trade, as investors fled risk assets on the back of a dismal US employment report and ahead of the US Labour Day long weekend. With the non-farm payrolls report suggesting that no new jobs were created in August, fears once again soared that the US economy was on the verge of a double-dip recession and risk assets saw a predictable sell off. As the ultimate barometer of risk sentiment, the AUD could not escape the flight to safety. Having ended Friday’s Australian session around the 1.07 level, the AUD drifted over the course of the European and US equities sessions to close at 1.0645. Upon reopening for Asian trade, the negative sentiment has continued with the AUD continuing to fall, breaking down through 1.06 to its current level in the 1.0580 range. Elsewhere, the New Zealand dollar has erased some of its recent gains since Friday, with Asian stocks suffering another sharp decline. The Nikkei slid by almost 2.0% in the overnight session, which hurt demand for the New Zealand dollar. Events in the eurozone will dictate short-term movements in the kiwi dollar, particularly as we have no major data releases from New Zealand this week. Beyond this, there are still hopes that the RBNZ will hike rates next Wednesday evening.

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