Australia’s Dollar Fell To Lowest on Iron Prices

by on December 15, 2014 6:29 am BST

The Aussie weakened against most of its 16 major peers after Treasurer Joe Hockey said yesterday the budget deficit is deepening because of the biggest slump in the nation’s terms of trade since records began more than 50 years ago. The yen pared gains after Prime Minister Shinzo Abe’s victory in elections he called to win a fresh mandate for policies that have driven Japan’s currency to a seven-year low.

Aussie near low since June 2010 and the nation’s bonds rallied as commodities slumped and people were taken hostage in a cafe in Sydney’s financial district.

The Aussie slid 0.1 percent to 82.41 U.S. cents as of 2:21 p.m. in Tokyo, after touching a four-year low of 82.04.

A group of people has been taken hostage in a cafe in Sydney, where a black flag with Arabic writing was placed in a window, Australian television channels reported. Armed police cleared the square in the city’s central business district, as Prime Minister Tony Abbott convened Cabinet’s National Security Committee for briefings on the siege. Police said they were trying to make contact with hostages inside the Lindt cafe and urged people in the area to stay indoors and away from open windows.

Not all agreed that the hostage situation was the main driver for the Aussie.

Australia’s budget deficit for the year ending June 30 will widen to A$40.4 billion ($33.2 billion) from a May estimate of A$29.8 billion, Hockey said in a mid-year update today.

Australia’s three-year government bond yield dropped to 2.162 percent, the lowest since July 2012. The benchmark 10-year yield fell to 2.815 percent, also the lowest since July 2012.