On Friday, the riskier commodity and emerging market currencies were taking a beating as investors flocked to safe haven assets. The Australian Dollar (AUD) and New Zealand Dollar (NZD) both weakened as a result.
The flight into safer assets increased after US President Barack Obama approved the use of air strikes over Iraq in a desperate attempt to prevent the genocide of the Yazidi people who are being besieged on a mountain by Islamic fighters and are desperately short of food and water.
On Thursday, Jihadist fighters of the self proclaimed Islamic State captured Iraq’s largest Christian city of Qaraqoush.
The attackers told all Christians and other religious minorities to leave, covert or die.
With the capture of the Christian city, the Islamic State is pressing on the borders of Kurdish controlled territory, threatening to capture that territory as well.
‘When we face a situation like we do on that mountain, with innocent people facing the prospect of violence on a horrific scale and we have a mandate to help. In this, case a request from the Iraqi government. When we have unique capabilities to act to avoid a massacre, I believe the United States cannot turn a blind eye,’ said President Obama.
Following the President’s announcement currencies such as the ‘Aussie’, ‘Kiwi’, ‘Loonie’ (CAD) and Rand (ZAR) as well as emerging market currencies such as the Turkish lira (TRY) and Indian Rupee (INR) all fell.
Against the US Dollar (USD), the Aussie exchange rate declined to a two-month low to trade in the region of 92 cents.
Positive trade data out of China, Australia’s biggest trade partner offered little support to the currency.
‘The immediate reaction has been out of risk currencies and out of commodity currencies like the Australian dollar, there’s a further concern now about global growth prospects. A clear knock-on effect here is a higher oil price and a choking off of a very fragile recovery in Europe,’ said a senior currency strategist from CMC Markets.
The New Zealand Dollar remained under heavy pressure from falling dairy prices and reduced expectations for further interest rate rises.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9250 ,
Australian Dollar,,Pound Sterling,0.5504 ,
Australian Dollar,,Euro,0.6913 ,
Australian Dollar,,New Zealand Dollar,1.0948 ,
US Dollar,, Australian Dollar ,1.0813 ,
Pound Sterling,, Australian Dollar ,1.8158 ,
Euro,, Australian Dollar ,1.4465 ,
New Zealand Dollar,, Australian Dollar ,0.9135 ,
[/table]
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