SINGAPORE: The Australian dollar - often viewed as a barometer of risk appetite - hit multi-year lows on Friday (Oct 5) as yield spreads continued to widen in the US dollar's favour.
Against the Singapore dollar, the Australian dollar touched 0.9750, the lowest since Feb 11, 2016.
Since the end of August, the Aussie has been trading below parity versus the Singapore dollar, and is down nearly 8 per cent on a year-to-date basis.
The Australian dollar also touched a 32-month low of 0.7055 against the greenback, leaving it down 2.3 per cent so far this week and on track for its worst performance since mid-June.
The US dollar was again supported by upbeat domestic data and growing speculation the Federal Reserve might turn more aggressive in hiking interest rates.
The yield on the benchmark 10-year note hit a fresh seven-year high overnight following data released the previous day that was seen as increasing the odds a Friday payrolls report would also be stronger than expected.
A strong outcome, particularly for wages, would likely push Treasury yields higher and the Aussie lower.
"The obvious catalyst for the move in the US dollar has been the increase in the US Treasury yields," said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
INDONESIAN CURRENCY ALSO UNDER PRESSURE
Meanwhile, Indonesian authorities are assessing global developments that triggered a rally in the dollar to determine whether they need to take further steps to halt outflows which have pummelled the rupiah, the finance minister said on Friday.
The rupiah has been under renewed pressure this week after global oil prices rose, and weakened past 11,000 against the Singdollar for the first time since at least 1992 on Friday.
"For our economy, we see that these (global) dynamics must be addressed and the measures by the government, Bank Indonesia or the Financial Services Authorities, whether they need to be expanded because the dynamics have changed and are getting stronger," Minister Sri Mulyani Indrawati told reporters at the sideline of an economic event.