Confidence has been in short supply across the Pacific, with the Aussie’s declines against the US dollar mirroring the slides seen in equity indices in the region.
The US downgrade to AA+ from AAA by Standard & Poor’s has rattled risk sentiment, and a rally on news of ECB purchases of Spanish and Italian debt was short-lived. Global growth fears are the main driver here, given the importance of commodities to the performance of the aussie. So long as investors shun such assets, the aussie is likely to find the going quite tough. The Australian dollar has declined against its US cousin for eight successive days, a run not seen since 11 September 2011, and with the global growth scenario coming under even greater pressure, it would not be surprising to see AUD/USD continue its losing run.