Aussie Dollar Vulnerable to Deeper Losses on Swelling Risk Aversion

The Australian Dollar and other sentiment-sensitive currencies are at risk of deeper losses as risk aversion continues to sweep across financial markets.

Talking Points:

• Australian Dollar Declines as Asian Markets Follow Wall Street Downward

• UK and US Stock Index Futures Hint Risk-Off Dynamics Likely to Continue

• See Economic Releases Directly on Your Charts with the DailyFX News App

The Australian Dollar underperformed in overnight trade, sliding as much as 0.4 percent on average against its leading counterparts. The move tracked a selloff across Asian stock exchanges, pointing to risk aversion as the catalyst behind the decline. The MSCI Asia Pacific regional benchmark equity index slid over 1 percent, apparently taking its cues from a drop on Wall Street.

Newswires attributed building negativity to swelling global slowdown fears. Indeed, a survey of economists polled by Bloomberg shows 2014 global GDP growth bets languishing near two-year lows while expectations for 2015 are at their weakest since polling for that period began in early 2013.

Looking ahead, a quiet economic calendar in European and US economic hours hints sentiment trends will remain at the forefront. Futures tracking the FTSE 100 and S&P 500 stock indexes are pointing lower in late Asian trade, hinting at continued risk aversion through the end of the week. That bodes ill for the Aussie as well as other commodity-bloc and emerging-market currencies.