The Aussie dollar dropped as low as $0.6908, its weakest since July 2020, having fallen 1.7% overnight.
“The Aussie is primarily a risk-sensitive currency and in recent days the market has become more concerned about the global growth outlook, with risk aversion also seen in the big declines in equity markets around the globe. Against that backdrop it’s not surprising to see it struggling,” said Rodrigo Catril a currency strategist at NAB.
He said also that from a technical perspective, the Aussie’s drop below a level just above $0.70 left it vulnerable.
The Australian dollar has been driven lower by a drop in commodity prices, as China introduces new COVID-19 measures.
Additional restrictions have been introduced in Beijing and Shanghai, as the country shows no sign of letting up its Covid zero policy.
The move saw prices of commodities plummet, with concerns over weakened demand from the country.
Many investors have fled to the US dollar as a safe haven, which has added further pressure to commodity prices, as it becomes more expensive for buyers holding other currencies.
Often known as a commodity currency, the drop in prices saw the Aussie dollar depreciate as Australia’s terms of trade weakened.
As Australia’s biggest trading partner, the additional pandemic restrictions in China also weighed on the dollar, which is now trading at 70 US cents.
AUD/USD Short (Sell)
Enter at: 0.69203