Aussie dollar bludgeoned

THE Australian dollar has been cowed by global growth concerns, while bonds extended their recent rally to drive many yields to all-time lows.

The Aussie dollar was stuck at 70.75 US cents, having failed to hold last week’s brief top at 71.68.

A general rush to safety mostly benefited the Japanese yen, slapping the Aussie down almost 1.2 per cent on Friday to last stand at 77.85.

The slide followed disappointing manufacturing surveys from across the globe, and especially Europe, which weighed on risk sentiment and prices for industrial commodities, including copper. “Our AUD short term model suggest fair value is currently at 71.86, so in spite of Friday’s risk aversion, the AUD/USD still looks a little bit undervalued,” said Rodrigo Catril, a senior FX strategist at NAB.

The run of poor economic data globally had also seen inflation expectations crash and added to downward pressure on the longer end of the yield curve. Yields on 10-year Australian bonds have dived almost 20 basis points in just a week to hit record lows at 1.77 per cent.