The Australian dollar has extended its losses overnight on continued falls in commodities and global equity markets, particularly the mining related stocks as the price gap continues to close.
At 0700 AEDT on Wednesday, the currency was trading at 72.04 US cents, down from 72.25 cents on Tuesday. The local unit was one of the worst performers overnight among all commodity based currencies as concerns of oversupply and waning demand weighed on core global equity indices with resources and energy stocks leading the sell off.
"There's an overall sense of panic that global demand may not be as strong as the market thought," BK Asset Management's managing director of FX strategy Boris Schlossberg said. The benchmark Brent crude price slipped below 40 U.S. dollars per barrel over night while U.S. based West Texas Intermediate (WTI) fell below 37 U.S. dollars for the first time since 2009 while spot iron ore hit fresh record lows.
The Australian dollar has been one of the primary victims of the commodities rout which is adding downside pressure to the divergence of the unit to commodity prices which was supported from financial services transactions. At 1012 local time (AEDT), the Australian dollar was trading at 72.22 U.S. cents.
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