Bloomberg News

Australian, New Zealand Dollars Weaken on European Debt Crisis

April 16, 2012

The Australian and New Zealand dollars dropped against their U.S. counterpart and the yen as Spanish bond yields rose, spurring concern Europe’s sovereign- debt crisis will spread.

The two South Pacific currencies weakened against most major peers as raw-materials prices fell for a second day. Spain is scheduled to sell debt today as the nation’s borrowing costs jumped to the highest this year. Italian government-debt yields were at almost a two-month high.

“Risk assets are going to sell off pretty hard this week, because there are a lot of negatives out there,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. (WBC) in New York. “You could get a little bit of a blood bath around the Spanish auction. Pressure on Spain and Italy will intensify”

The Australian dollar depreciated 0.1 percent to $1.0356 in New York yesterday, falling for a second consecutive day. It was 0.8 percent weaker versus the yen at 83.27.

New Zealand’s dollar declined 0.3 percent to 82.04 U.S. cents and dropped 0.9 percent to 65.96 yen.

The Standard & Poor’s GSCI Index (SPGSCITR) of 24 raw materials sank 1 percent.

Spanish 10-year bond yields jumped as much as 18 basis points, or 0.18 percentage point, to 6.16 percent yesterday, the highest level since Dec. 1, before trading at 6.07 percent. Five-year credit-default swaps linked to Spanish bonds reached an all-time high of 521, CMA data show.

Italian bond yields climbed as much as 15 basis points to 5.67 percent.

To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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