The Australian and New Zealand dollars struggled near multi-year lows on Tuesday as investors waited to see if Greece could restart financial aid talks with its European creditors and avoid crashing out of the single currency.
An absence of any surprises from Australia’s central bank policy review kept both Antipodean currencies in narrow ranges on the day.
The Aussie was just a touch softer at $0.7498, having set a six-year low of $0.7452 on Monday. Its New Zealand peer traded at $0.6670, hovering above a five-year trough of $0.6645.
The Reserve Bank of Australia held interest rates at record lows, as widely expected. It continued to highlight the need for a lower currency as well.
“Essentially it is a cut and paste of the June statement,” said Prashant Newnaha, strategist at TD Securities, adding that the market was focusing more on Greece.
“There’s a lot of uncertainty associated with how this scenario with Greece is going to play out, at the moment I think most investors are in wait-and-see mode.”
France and Germany told Greece on Monday to come up with serious proposals in order to restart financial aid talks, a day after Greeks voted overwhelmingly to reject more austerity.
The Antipodean currencies also struggled against other currencies, with the kiwi plumbing a near six-year low against sterling around NZ$2.3404 per pound.
A sharp fall in New Zealand’s business sentiment to a three-year low kept the kiwi on the defensive as it added to evidence that slowing economic growth will likely require more interest rate cuts in the coming months.
The kiwi has tumbled 14 percent on the greenback in the past two months, and analysts believe its losses will continue to mount given that market uncertainty will likely keep investors risk averse.
“We’ve got Greece, a slowing China, a slowing domestic pulse… (and) the Fed eventually normalising rates, whereas New Zealand is undergoing slower growth,” ANZ currency strategist Sam Tuck said.
New Zealand government bonds were subdued, while Australian government bond futures sustained levels from Monday’s rally. The three-year contract was 3 ticks higher at 98.060 and the 10-year contract was up 4 ticks at 97.0650.