Australian Dollar Retreats as Fears of European Crisis Grip FX Market

The Australian dollar gained today on speculation that its previous losses were excessive. The currency trimmed gains versus the Japanese yen and fell against the US dollar as fears of the European crisis returned to Forex traders.
FX traders felt risk appetite for a short time after a report showing growth of the German economy. The positive mood was short-lived, though, and currently speculators feel aversion to risk. Talks that Greece may leave the eurozone abound and hurt riskier currencies, like the Australian dollar.
Today’s minutes of the Reserve Bank of Australia’s monetary policy meeting on May 1 indeed mentioned the problems in Europe:

With financial markets remaining unsettled, the risks emanating from Europe continued to cloud the global outlook.

What was even worse for the Aussie, the minutes stated that domestic fundamentals in Australia are not very good:

Growth outside of the mining sector was expected to be below trend in the near term, affected by the high exchange rate, softer government spending and subdued conditions in the housing market and building industry more generally.

All in all, it is not surprising that the Aussie fell against the greenback, but managed to outperform the euro. The ability to keep part of gains against the yen was a surprise, though.
AUD/USD was down from 0.9959 to 0.9932 as of 19:49 GMT today, while intraday it jumped as high as 1.0015 and fell to 0.9921 — the lowest rate since December 20. EUR/AUD slipped from 1.2870 to 1.2814. AUD/JPY climbed from 79.51 to 80.14 before trading at 79.67.

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