Nov. 7 (Bloomberg) -- The Australian dollar dropped against its U.S. counterpart as concern the European sovereign-debt crisis is spreading to Italy sapped demand for riskier assets.
The Aussie advanced earlier along with the New Zealand dollar after Greek Prime Minister George Papandreou agreed to step down to allow a unity government to secure an international bailout. The Australian currency weakened versus the yen after a report showed the country’s job notices decreased.
“Whilst we had some positive news from Greece, the focus now shifts slowly to Italy,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “If European sentiment is poor, Aussie and kiwi will be trading poorly.”
Australia’s dollar weakened 0.4 percent to $1.0329 at 12:27 p.m. in New York, after earlier rising as much as 0.5 percent. The currency slid 0.7 percent to 80.61 yen. New Zealand’s dollar, nicknamed the kiwi, was little changed at 79.37 U.S. cents. The kiwi fell 0.3 percent to 61.94 yen.
The MSCI World Index of stocks dropped 0.7 percent.
Italian Prime Minister Silvio Berlusconi faces mounting pressure to step down as the nation’s 10-year borrowing costs surged to as high as 6.7 percent, approaching the 7 percent level that forced Greece, Ireland and Portugal to seek bailouts. He’s vowed to continue the “battle” and said he won’t resign.
Demand for the South Pacific nations’ currencies was supported earlier as Greece’s Papandreou and Antonis Samaras, the leader of Greece’s main opposition party, agreed to form a unity government that will implement decisions needed to secure international financing and then hold elections. Papandreou won’t lead the new government, according to a statement handed to reporters in Athens yesterday.
Job Ads Fall
A private report showed job notices in Australia fell in October for a fourth straight month. Jobs advertised in newspapers and on the Internet dropped 0.7 percent after declining a revised 2.2 percent in September, the Australia & New Zealand Banking Group Ltd. data showed.
“The instability in Europe, as well as a sluggish U.S. recovery, is clearly having an impact on Australia,” Treasurer Wayne Swan wrote in a weekly economic note yesterday.
Swan said today his government is determined to get its budget back into surplus in 2012-2013 even as an analysis by Deloitte Access Economics projected the government is unlikely to meet its pledge without policy changes.
--With assistance from Catarina Saraiva in New York. Editors: Greg Storey, Dennis Fitzgerald
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