By TraderVox.com
Tradervox (Dublin) – The troubles in Europe seem to spillover to the south pacific countries, and despite yesterday’s rally, the kiwi and Aussie has plunged back into declining trend. The Australian dollar has weakened to its lowest this year as Greece status in the 17-nation trading bloc hangs on the balance.
The Aussie is trading at four-month low against the Japanese currency as the Asian stocks continued with their downward trend for almost a week. The kiwi has weakened for the fourth day, despite technical indicators showing the recent decline has been excessive. The decline came after Fonterra Cooperative Group Ltd indicated that the milk export prices have continued to decline and it’s at two-and-a-half-year low.
Derek Mumford of Rochford Capital said that the current decline in south pacific dollars is due to the general risk aversion in the forex market. He added that the current trend is not only caused by the Greek situation, but the whole euro-zone situation has added to fears in the regions ability to adhere to austerity measures. He also went ahead to predict that Aussie will drop to as low as 97.50 US cents with in the coming weeks.
The Greek and French elections sparked risk aversion in the market, and this has continued as Greece struggles to form Unity Government. Finance ministers from the region have been meeting to discuss the issue where they have warned that the rescue fund will not be tampered with unless Greece forms a government. The Milk prices have compounded the situation for the New Zealand dollar.
The Australian dollar closed the Asian session 98.92, after it had touched 98.90 US cents, the weakest it has been since December 19. The Aussie was 0.5 percent lower from the close in New York. Aussie slid to 79.39 yen which the lowest since January 17, before it appreciated to 75.50, which was lower than yesterday’s close of 79.67. the kiwi declined 0.5 percent against the dollar to trade at 76.56 US cents after it slid to its lowest since December 20 of 76.48.
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