The Aussie dollar was trading flat against the US dollar this morning, halting a two-day slide in the currency during which it fell the most in eight weeks.
The sell-off in equities in the last two days has dented general risk appetite and put pressure on the Aussie dollar. Further dampening demand for the Aussie dollar was a report from the Australian Bureau of Agricultural and Resources Economics and Sciences (ABARES) that the floods in Queensland would cost the agricultural sector $600 million or more, while the loss of coal exports could cost the economy $2.5 billion. The uncertainty over the total cost of the floods may limit gains in the Aussie dollar in the near term. Furthermore, China’s robust GDP growth reported yesterday has put a lid on commodity prices for the time, being as investors fret over additional tightening measures from the world’s second largest economy. Considering these factors it seems that the bias is on the downside for the Aussie dollar in the short term