The Australian dollar slumped to its lowest level in more than four months overnight after improved US economic figures and comments from Federal Reserve chairman Ben Bernanke's boosted the greenback.
At 7am AEDT the currency was down half a cent, trading at 102.33 US cents compared with 102.83 US cents at yesterday’s local close. It earlier fell to 102.00 US cents, its lowest level since early October.
BK Asset Management managing director Kathy Lien said the Australian dollar fell after Mr Bernanke's twice-yearly testimony to Congress and improved US consumer confidence and housing figures.
Ms Lien said Mr Bernanke neither endorsed nor dismissed the idea the Fed could end its stimulus program, known as quantitative easing, earlier than previously expected.
“The US dollar was bought on Bernanke's nonchalant attitude towards phasing out asset purchases,'' Ms Lien said.
Meanwhile, the US Conference Board's consumer confidence index hit 69.6 in the month of February, while the Commerce Department reported a 15.6 per cent increase in new home sales, the biggest increase in nearly two decades.
“That was released around when Bernanke spoke and contributed in the Aussie dollar's selloff,'' Ms Lien said.
But, she said, a rally in US stocks helped lift the Australian dollar from its lows. Ms Lien said the key driver for the Australian dollar during today’s local session would be developments in Japan, where the government is preparing to appoint a new central bank governor.
