Aussie dollar falls with U.S. equities, iron ore

The Australian dollar has retreated overnight as U.S. equities and falls in iron ore caused a broad-based sell off.

At 0700 local time (AEDT) on Thursday, the local unit was trading at 69.61 U.S. cents, down from 70.26 U.S cents at Wednesday's Asian close. The currency had gained after stronger than expected Chinese trade data.

A broad-based sell off in the local unit occurred mainly in the New York session overnight, weighed by falls in U.S. equities - helpful forward-looking indicators - and downward pressure on base commodities.

"The combination of lower (iron ore) commodity prices weighing on the Australian dollar despite record Australian resources volumes (confirmed by the quarterly data) supports the long-held notion that the commodity price-denominated terms of trade, rather than commodity volume-denominated exports are the more influential driver of the AUD," Commonwealth Bank of Australia currency strategists said in their morning note.

The unit was relatively stable though most of the U.S. session but in the last two hours, when U.S. equities fell on oil, the Australian dollar dropped on risk aversion, OM Financial senior client adviser Stuart Ive said.

The key risk in local trade is the release of Australian employment data following two months of very large and unexpected increases.

"We may see a correction to the downside which will add further pressure this afternoon," Ive said.

At 1015 local time (AEDT), the Australian dollar was trading at 69.49 U.S. cents. Endit