FRS: Australian, N.Z. Dollars fall for third day as Asian stocks fall on Greece
The Australia and New Zealand dollars weakened for a third day as a decline in Asian stocks damped demand for higher-yielding assets.
New Zealand’s currency headed for its biggest weekly loss in six weeks on speculation the Greek debt crisis will spread to other European countries and slow global growth. The Australian dollar approached a three-week low after Federal Reserve chairman Alan Greenspan said a default by Greece was “almost certain” and may help drive the U.S. economy into a recession.
“Greece’s debt issue and a slowdown in the U.S. economy remain the main focus of the markets,” said Kengo Suzuki, manager of the foreign bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank. “Reduced risk appetite is weighing on the Aussie and kiwi.”
Australia’s dollar fell to $1.0525 as of 4:14 p.m. in Sydney from $1.0558 in New York yesterday, when it slipped to $1.0478, the weakest since May 25. The currency slid 0.3 percent to 84.90 yen.
New Zealand’s dollar depreciated 0.2 percent to 80.32 U.S. cents, extending this week’s decline to 2.2 percent, the most since the period ended May 6. The so-called kiwi dropped to 64.79 yen from 64.89 yen.
The MSCI Asia Pacific Index of shares dropped 0.5 percent, a third day of losses.
Merkel, Sarkozy
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet today in Berlin to discuss a rescue package for Greece. EU finance ministers agreed on June 14 to convene again on June 19 after they failed to reconcile a German-led push for bondholders to shoulder part of the cost of a new plan for Greek aid.
“The problem you have is that it’s extremely unlikely the political system will work” in a way that solves Greece’s crisis, Greenspan, said in an interview yesterday with Charlie Rose in New York. “The chances of Greece not defaulting are very small.”
The two South Pacific currencies also dropped before a U.S. report that economists said will show consumer sentiment worsened this month.
The Thomson Reuters/University of Michigan index of U.S. consumer sentiment slipped to 74 from 74.3 in May, according to a Bloomberg survey before today’s report.
“The twin concern of markets at present was again at the fore -- Greece and the poor run of U.S. data,” Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington, wrote in a note to clients.
Ten-year Australian bond futures for June delivery fell 0.04 to 94.88 on the Sydney Futures Exchange. The implied yield climbed four basis points to 5.13 percent.
