The Australian and New Zealand dollars weakened against most of their major counterparts as concern the Greek government will fail to avoid a debt default sapped demand for higher-yielding currencies.
The kiwi fell the most against the U.S. dollar of the 16 most-active currencies as commodity prices declined, hurting the outlook for the nation’s exports. Greek Prime Minister George Papandreou appealed for support yesterday to push through austerity measures as parliament started a debate on a confidence motion in his new government.
“The Aussie outlook in the next few weeks, or even few months, doesn’t look that great,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp, Australia’s second-largest lender. “Global risk aversion remains high. That’s mainly because the European situation is still quite unstable.”
Australia’s dollar fell to $1.0560 as of 2:37 p.m. in Sydney from $1.0623 in New York last week after dropping to $1.0478 on June 16, the weakest since May 25. The so-called Aussie declined 0.4 percent to 84.66 yen. New Zealand’s dollar slipped 0.7 percent to 80.72 U.S. cents, and weakened 0.5 percent to 64.72 yen.
European governments on the weekend failed to agree on releasing a loan payment to spare Greece from default, increasing pressure on Papandreou to first deliver budget cuts in the face of domestic opposition.
Decisions on the next payout and a three-year follow-up were put off until July, prolonging Greece’s fiscal uncertainty. The Greek government needs parliamentary approval for a 78 billion-euro ($111 billion) program of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout plan.
Service Expansion
New Zealand’s dollar weakened even as reports showed services industry expanded at a faster pace in May and manufacturing volume increased.
The performance of services index climbed to 52.8 from 52.6 in April, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said in an e-mailed statement. A reading above 50 indicates an expansion. Manufacturing output rose 1.9 percent in the first quarter after a 3.7 percent increase the previous period, Statistics New Zealand said.
The terms of trade, which are at a 39-year high, and demand for exports from Asia and Australia are reasons to be positive about the nation’s economic future, Finance Minister Bill English said in a video statement released today.
“The New Zealand economy remains resilient,” supporting the kiwi, said Kengo Suzuki, manager of the foreign bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest listed bank.
Ten-year Australian bond futures for June delivery rose 0.04 to 94.91 on the Sydney Futures Exchange. The implied yield fell four basis points to 5.09 percent.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 3.31 percent.
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
