The Australian dollar has slipped against a strengthening US counterpart which has benefited from more risk-adverse sentiment.
At 0635 AEST on Tuesday, the Australian dollar was worth 79.37 US cents, down from 79.59 US cents on Monday.
Westpac’s Imre Speizer says markets had adopted a risk-adverse stance after inflammatory comments from North Korea.
North Korea’s foreign minister said US president Donald Trump had declared war on the country and it reserved the right to take countermeasures, including shooting down US bombers even if they are not in its airspace.
The White House disputed the declaration, calling the suggestion “absurd”.
“The US dollar rose and bond yields and equities fell,” Speizer said in a Tuesday morning note.
“The US dollar index rose 0.5 per cent … (and) the safe-haven yen (and Swiss franc) outperformed, USD/JPY falling from 112.30 to 111.48.
“AUD slipped from 0.7970 to 0.7926.”
He said the main local risk event on Tuesday would be Reserve Bank of Australia (Financial Stability) Michele Bullock is scheduled to participate in a panel discussion at the Landers & Rogers and Westpac-hosted briefing entitled Where to from here? in Sydney.
The Aussie dollar “could slip further to 0.7910 if the risk averse mood persists” on Tuesday, he said.
The local currency is also lower against a stronger yen but has risen against the euro.
AAP
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