South Pacific Dollars Decline over Concerns in Europe

By TraderVox.com

Tradervox (Dublin) – The Aussie and kiwi continued with their decline for the third day today as concerns in Europe escalated. Traders have been seen to move to safe haven assets as the crisis in Europe worsens. Traders are pointing that Spain has shown signs of a debt crisis that may warrant bailout just like Portugal, Ireland, and Greece.

The Australian dollar fell after minutes from the Reserve Bank of Australia showed that officials are willing to make interest rate cuts if the data from the country and around the world continue to deteriorate. The Chinese economy, which is Australia’s biggest trading partner, increased at a slower pace that it had been expected over the first quarter of the year.

Aussie’s South Pacific counterpart, the Kiwi, dropped to lowest in almost six weeks against the yen, as concerns about asset purchases eased last week after the Bank of Japan decided to keep it asset purchases program on hold as well as the monetary policy. The New Zealand dollar may also have been affected by the falling of global shares yesterday after Spain’s borrowing cost surged to the highest this year. Economists have given a dim outlook for the euro-zone causing the currency to decline further against major currencies.

According to Derek Mumford, market concerns are now likely to shift to Spain for the next few months which might not be good for the south pacific currencies. He expects the Aussie to test the 1.02 level against the dollar over the next couple of weeks.

The Australian dollar fell against the US dollar by 0.4 percent to $1.0317 in the Asia session making it the third day the currency have fallen. Against the yen, the Aussie fell by 0.4 percent to trade at 82.96 yen after it had weakened by 0.8 percent yesterday. The other South Pacific dollar, kiwi, dropped by 0.6 percent against the dollar to trade at 81.58 US cents; it touched 65.57 against the yen during the intraday trading, which is the weakest it has been since March 7, before closing the day 0.5 percent lower than yesterday’s close.

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