The Australian dollar continued its fall overnight, trading at 88.41 US cents early Wednesday morning down from 89.00 cents on Tuesday.
Analysts said geopolitical concerns weighed on the Australian dollar, unwinding Tuesday’s gains made on the back of better-than-expected Chinese manufacturing figures.
The US and its Arab allies unleashed deadly bomb and missile strikes on jihadists in Syria overnight.
“Support for the Australian dollar on yesterday’s better-than-expected HSBC flash China PMI is now a rather distant memory,” National Australia Bank global co-head of FX strategy Ray Attrill said.
“Assisting the move lower in high-yielding currencies has been a tick higher in market volatility.
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“Markets noted the step up in American-led military action against ISIS in the Middle East.”
The dollars fall to eight-month lows is expected to be welcomed by the Reserve Bank.
The Bank today releases Australia’s Financial Stability Review.
Its expected to address concerns of an east coast housing price bubble.
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A review of housing loans has also raised concerns about ‘low doc’.
The review by the Australian Securities and Investments Commission (ASIC) shows lenders have become more vigilant in verifying a borrowers’ financial situation since the introduction of responsible lending laws in 2010.
Fewer low doc loans – that require less paperwork – are being issued, and more information about a borrowers’ income is being obtained, ASIC said.
But it also found record keeping is still poor in some cases, and verification of borrowers’ expenses or other loans is sometimes limited.
“Our review shows lenders have lifted their game since the introduction of responsible lending laws,” ASIC deputy chairman Peter Kell said.
“However, industry must not be complacent.
“Compliance with responsible lending laws is a key focus for ASIC and we will take appropriate enforcement action where conduct falls short.”
