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July 29 (Bloomberg) -- The Australian and New Zealand currencies were poised for weekly drops against the yen as U.S. politicians struggled to resolve the budget deadlock and Spain faced a possible downgrade by Moody’s Investors Service.
“Risk appetite is clearly declining,” said Thomas Harr, head of Asian foreign-exchange strategy at Standard Chartered Plc in Singapore. “This warning that Spain could be downgraded is clearly hurting risk sentiment broadly, and Aussie and kiwi are relatively vulnerable to risk sentiment.”
New Zealand’s dollar was little changed at 67.72 yen at 11:52 a.m. in New York, compared with 67.68 yesterday, and has fallen 0.4 percent this week. The Aussie slid 0.7 percent to 84.89 yen and has fallen 0.7 percent for the week.
The Aussie and kiwi slid for the week after U.S. House of Representatives Speaker John Boehner canceled a vote on his plan to increase the U.S. debt ceiling and Spain’s Prime Minister Jose Luis Rodriguez Zapatero called early elections as austerity measures eroded support for his Socialist Party.
The kiwi also fell after a report showed New Zealand’s home-building approvals fell in June for the second time in three months. Second-quarter approvals were the lowest in at least 12 years, falling 7.5 percent from the first three months of the year and 26 percent from a year earlier.
The Australia and New Zealand dollars may gain versus the euro as the two nations’ central banks are likely to raise interest rates while Europe struggles with its sovereign-debt crisis, according to Royal Bank of Scotland Group Plc.
Investors may benefit from bets that the euro will drop to A$1.20 and NZ$1.50 by about the first quarter of next year, Greg Gibbs, a foreign-exchange strategist at RBS in Sydney, wrote in a note to clients yesterday.
--With assistance from Joe Ragazzo in New York. Editors: Dennis Fitzgerald, Paul Cox
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