Australian dollar hits new six-year low, weighed down by China concerns

The Australian dollar skidded to a new six-year low on July 8 thanks to falling iron ore prices and a further drop in Chinese stocks.
The Australian dollar skidded to a new six-year low on July 8 thanks to falling iron ore prices and a further drop in Chinese stocks.PHOTO: BLOOMBERG

SYDNEY (REUTERS) - The Australian dollar skidded to a new six-year low on Wednesday as falling iron ore prices and a further drop in Chinese stocks spooked a market already shaken by Greece's debt crisis.

The Aussie, often used as a liquid proxy for China plays, slumped as deep as US$0.7390, surpassing the overnight low of US$0.7398. It has since edged back to US$0.7411.

"Any risk-off sentiment that's particularly related to China will see the Aussie get hit pretty hard," said Sue-Lin Ong, head of Australia and New Zealand FIC strategy at RBC Capital Markets.

"The most pressing factor at the moment is developments in key commodity prices in China. Iron ore fell overnight. Asian equity markets in China have opened up much weaker this morning," she added.

Chinese iron ore futures plunged nearly 8 per cent to a record low as the selloff in China-traded commodities showed no sign of letting up amid a bearish view on the economy and following steep losses in equities.

Chinese stock markets tumbled again as investors shrugged off a series of support measures by Chinese regulators, including the central bank's first public statement in support of the market since it cut interest rates in late June.

The Aussie also lost ground against the safe-harbour yen, reaching a three-month trough near 90.20 yen.