AUD/USD Falls for Second Session on Prospects of Greek Default

The Australian dollar kept its gains against the US currency and the euro, but continued to fall versus the Japanese yen after Standard & Poor’s reduced Greece’s credit rating to selective default.
Commodity currencies were under pressure at the beginning this week as the Group of Twenty declined Europe’s request for help unless the European Union would bolster its firewall to prevent spreading of the financial crisis. Market sentiment was further hurt by downgrade of Greece’s debt rating by S&P. Positive mood is quickly waning from the Forex market and the Aussie feels it.
Andrew Salter, a strategist at Australia & New Zealand Banking Group Ltd., explained:

Most participants do expect that Greece will default at some point. The Aussie would underperform against most currencies in such an event.

That outlines the current trading environment: worries returned and Australia’s currency (as most other currencies, in fact) will likely suffer from them. Analysts were hoping that Greece would leave news headlines, at least for some time, but the country and its problems shattered such hopes, remaining in the focus and maintaining the negative influence on the market.
AUD/USD was at 1.0759 as of 3:17 GMT today after rising from 1.0704 to 1.0757 yesterday. EUR/AUD stayed at 1.2462 today, following yesterday’s drop from 1.2571 to 1.2450. AUD/JPY declined from 86.65 to 86.31 after yesterday it reached 87.46, the highest level since July 8, before erasing gains.

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