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The Australian dollar took a beating on Friday morning amid a flight to the greenback sparked by mounting concerns over the health of the global economy.
By 7am AEST on Friday morning, the $A was trading down more than 1 US cent at $US1.0037, having closed at $US1.0161 on Thursday.
BK Asset Management managing director of FX strategy Kathy Lien attributed the drop in the Aussie to an investor flight to safe-haven assets.
“Manufacturing data from China and from the US added pressure on the Australian dollar and raised concerns about global growth,” Lien said told AAP. “Even if we get a resolution for a broader fiscal and banking union for the euro zone, it’s a question of whether that will take the focus off all the pressures on global growth.”
The fall in the value of the Australia dollar came as investors hammered US markets. On Wall Street, the Dow Jones Industrial Average slumped 1.96 per cent to close at 12,573.5, while the S&P 500 dropped 2.23 per cent to 1325.49 and Nasdaq slumped 2.44 per cent to 2859.09.
In Europe the mood was more muted, with London’s FTSE 100 finishing the day off 0.99 per cent, while the DAX 30 was down 0.77 per cent and the CAC 40 dipped 0.39 per cent.
The falls have set a grim scene for Friday trade in Asia, with Australia’s SPI futures down a hefty 48 points.
Among the factors contributing to the market turmoil: