By TraderVox.com
Tradervox (Dublin) – The Australian and New Zealand dollars have gained against the yen and the dollar as major technical indicators showed that the recent decline have been excessive. The two south pacific dollars had declined as concerns that Greece might be forced to leave the euro gained momentum after political leaders in Greece failed to come to a consensus regarding the formation of unity government.
This has caused traders to avoid riskier assets, hence lowering the demand for Aussie and Kiwi. The Australian bonds have also rallied after the release of the Reserve Bank Meeting minutes where the bank decided to reduce interest rate by 0.5 percent.
Recently, the Australian and the New Zealand dollars have been on the decline due to political turmoil in Greece. Greece president Karolos Papoulias is expected to hold another meeting with opposition leaders as he seeks to form unity government. The political situation in Greece is expected to delay efforts aimed at achieve austerity measures that were set during the international rescue of Greece. If leaders do not agree on terms of formation of government, the country may face another election.
According to Sean Callow who is a Senior currency strategist at Westpac Banking Corp. in Sydney, traders are confused on how the Euro zone will solve the current issues and the negative sentiments from the region are spilling over to the south pacific currencies as they are commodity related currencies. Euro zone crisis is affecting risk appetite in the market hence affecting the demand for Aussie and kiwi.
After technical indicators showed that the recent decline in Aussie and Kiwi is excessive, the Australian dollar increased by 0.4 percent against the greenback to trade at 99.93 US cents; the currency had earlier reached 99.45 cents, which is the lowest it has been since December 20. Against the Japanese yen, the Australian dollar rose by 0.4 percent to trade at 79.83 yen. its counterpart, the New Zealand dollar, rose by 0.3 percent against the dollar to trade at 77.86 US cents but it had earlier touched 77.52 cents which is the weakest since December 30. The Kiwi gained 0.3 percent against the yen to trade at 62.18 yen.
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