Greek Worries Send Euro, Aussie Lower

By: Barbara Zigah

Greek worries return to the fore as investors assess whether or not the debt-saddled country can satisfactorily pull together a deal to swap out maturing debt with new issuances. That worry has put risk currencies on the backfoot, with the Euro and the Australian Dollar being hit hard. As reported at 11:16 a.m. (JST) in Tokyo, the Euro was trading at $1.3142, off of an overnight low of $1.3103 on the EBS trading platform. The Australian Dollar struck a 6-week low versus the U.S. Dollar following news of GDP data in Australia which failed to meet expectations. The AUD/USD pair struck $1.0508 at one point, before recovering to trade recently at $1.0550. Only last week the pair was trading at a 7-month high above $1.08.

What is occurring in Greece is that some of the government’s private creditors, specifically foreign investors and Greek pension funds, are reluctant to participate in the much-needed bond swap, the deadline for which is Thursday. Analysts say that a low participation rate could ultimately lead to a disorderly default, in spite of the government’s efforts to avoid one. One trader says that that event and Friday’s non-farms payroll data could be the turning point for investor sentiment, provided both outcomes are positive.