Australian dollar fell in worse day in 10 months
The Australian dollar fell over 3 U.S. cents on Thursday, its lowest in eight months after massive selling from hedge funds and mutual funds increased market volatility that feed more panic in the markets.
A chain of stop-loss selling saw the Australian dollar falling to as low as $0.8271 against the U.S. dollar. It traded between $0.8330-$0.8375. On Wednesday, the Australian dollar closed at $.0.8583 here and was on track for its biggest daily fall since July 2009.
Against the yen, the Aussie dollar traded at 75.12 , nearly four whole yen from levels seen here late Thursday, after stop-loss selling kicked in below 76.00.
Adam Carr, an analyst at ICAP commented: "This is completely hysterical and it's a 100 percent overdone. Everybody is just being extremely cautious, and some people are looking and thinking how cheap can these babies get?"
He explained that most of the heavy selling coming from hedge funds and pension funds were not due to a weak Australian dollar, but was triggered by funds who opted to play it safe on the back of market uncertainties.
Industry analysts predicted that the one-month volatility would jump to 21.3 percent because of the wild swings in prices. It is the highest volatility in over four months and doubled the levels seen three weeks ago.
The proposed 40 percent super-tax on miners' profits are also adding to market uncertainty, as falling stock and commodity markets further added to gloomy mood on the Aussie dollar, seen as riskier.