Australian Dollar Falls Before European Debt Sales

Australian Dollar Falls Before European Debt Sales

The Australian dollar fell amid concerns that Europe’s debt crisis will continue to increase the region’s borrowing costs which will in turn halt demand for riskier assets. The Aussie fell versus the Japanese Yen before Italy and Spain sell debt this weak and Europeans leaders are set to meet on the 28th of June. Investors are doubtful whether another European summit could resolve Europe’s sovereign debt crisis. Europe’s four biggest economies have agreed to boost economic growth up 1% of the region’s national output as the leaders of Germany, France, Spain and Italy have pledge to set aside €130 billion for measures to support growth.

The New Zealand dollar is also struggling as it dropped against the greenback as Asian stocks declined extending US equities first five day loss in three weeks. The Aussie has dropped 1.7% versus the US dollar since December 31 last year whereas the so called kiwi has advanced 1.4%.

Greg Gibbs, a senior currency strategist at the Royal Bank of Scotland Group in Sydney said, “The Aussie and kiwi are caught between ongoing fears of contagion, slower global growth and expectations of further quantitative policy measures abroad.” Speaking of the situation in Europe he said, “Demand will still be there in European bond auctions, but obviously the yields that they pay are still very high.”