EN:Australian dollar (AUD): Currency comes under increasing pressure on Greek viability
The Australian dollar to US dollar exchange rate is 0.01% higher with 1 AUD = 1.0242 USD.
The pound Australian dollar exchange rate is 0.334% lower with 1 GBP = 1.5308 AUD.
The euro Australian dollar exchange rate is 0.186% lower with 1 EUR = 1.3338 AUD.
Over the last 24 hours, currency analysts have noted that the AUD has come under increasing pressure as concerns about the ongoing viability of Greece as part of the European Union and a pending default on its debt have weighed on investor risk appetite.
As the ultimate fiat currency barometer of risk sentiment, the Australian dollar has been particularly vulnerable to the constant flow of news, rumour and speculation emanating out of Europe. Having closed yesterday’s Australian equities session around the 1.0220 mark, the AUD drifted to an overnight low of 1.0165 before paring losses to close essentially unchanged at 1.0220.
News in early Asian trade that S&P had downgraded Italy’s credit rating proved a further blow to risk sentiment, and saw the AUD trade down to 1.0149 before recovering to currently levels in the 1.0190s. It was interesting to see AUD/USD spike 40 pips after the RBA minutes, which suggested the bank is firmly on hold until at least the end of the year.
"Given the markets were pricing in at least 75 basis points of rate cuts in that time frame, we are seeing a pairing out of rate cut expectations, effectively causing some short covering," says Cameron Peacock at IG Markets in Australia.
Looking at the markets we see that the FTSE 100 is called to open lower this morning on the continuing euro zone uncertainty following the news late last night that S&P had downgraded Italy's credit rating to A/A-1 and kept its outlook as negative on the back of the country's 'weakening economic growth prospects'.
Meanwhile the Greek aid talks continue with the country insisting that it was close to a deal to receive its next aid instalment.
There is no domestic economic figures due for release today so attention will focus at lunchtime on the US with the latest building permits data.
The pound is up against the euro but lower against the dollar with commodity prices in the main all weaker.
