WSJ:Australian Dollar Gains After Euro Zone Clinches Greece Deal
By ENDA CURRAN
SYDNEY--An agreement among euro-zone countries to ease Greece's debt burden sent the Australian dollar higher Tuesday, though analysts said the improved sentiment may not last long.
Greece's official creditors agreed to a number of steps to cut the country's debt to a level below 124% of gross domestic product by 2020. The measures, which include an extension of loan maturities, a cut to the interest rates Greece is paying on loans from its international partners and a debt buyback, should reduce Greece's debt to "substantially lower" than 110% in 2022, the Euro group said in a statement.
"This deal still has to be approved by the Greek parliament, which is never a guarantee when it comes to Athens," said Chris Tedder, a market strategist with FOREX.com. He added the debt-reduction targets may need to be revised if they can't be met in the allotted time frame.
The Aussie dollar was trading at US$1.0484 at 0540 GMT, up from US$1.0451 at the end of Sydney trade on Monday.
Locally, the Australian Bureau of Statistics issued preliminary data showing the nation's trade deficit more than doubled in the third quarter because of a slump in exports of iron ore and coal.
In the three months ended September, the seasonally adjusted deficit rose 120% to 4.65 billion Australian dollars (US$4.9 billion), from A$2.1 billion in the previous quarter, the ABS said.
"It tells you that near-term growth is weak, export earnings and profits took a big hit from commodity prices in the quarter," said Kieran Davies, an economist at Barclays Capital in Sydney.
Official data on corporate capital-spending plans in the third quarter, due to be released Thursday, will now be a crucial gauge of the health of the economy in the coming months. Most experts expect estimates of A$180 billion in spending to be revised lower.
The Reserve Bank of Australia is looking to offset an expected sharp fall in mining investment. The central bank has cut rates by one and a half percentage points since November to support growth amid global weakness, and to help rekindle demand in weaker sectors such as retail, housing and manufacturing--a process referred to as rebalancing.
