2014.08.0804:30:17UTC+00Australian dollar declines as US launches air strikes

The Australian dollar reached its new two-month low as a devitalized local economic outlook and escalating geopolitical upheaval continue to weigh down the currency.

On Friday, the Aussie traded at 92.47 US cents, down Thursday’s 92.66 US cents. In the early trade, the currency dropped as low as 92.44 US cents, its lowest level since June 3.

The Reserve Bank of Australia reduced its inflation forecasts in its monetary policy statement by 0.75 percentage points to a range between 1.75% to 2.75%.

“The revisions were a surprise to the market and the announcement by US President Barack Obama didn't help either. We have seen another step up in risk aversion after Obama announced he's authorised air strikes against ISIS rebels in Iraq,” said Steven Dooley, Currency Strategist at Western Union Business Solutions.

Meanwhile, the Australian bond futures prices rose. The three-year bond futures contract traded at 97.470, to 2.530%. The 10-year bond was at 96.685, to 3.315%.