The Australian has fallen to a new five and a half year low, after an anti-austerity party won the Greek election and falls in metals prices.
At 0700 AEDT on Tuesday, the local unit was trading at 79.18 US cents, down from 79.90 cents on Friday, before the Australia Day long weekend. Early on Monday morning, the currency fell as low as 78.72 US cents, its weakest level since July 2009.
Syriza, which won a resounding victory in Sunday’s general election, opposes the austerity program Greece accepted in exchange for the bailout, and plans to renegotiate the deal, including a possible renegotiation of the country’s debt.
National Australia Bank senior economist, David de Garis, said the result caused a euro sell off. “The US dollar ended last week on a strong note and started the week with more momentum, aided by further euro weakness,” he said. “While the Euro has come in for some predictable selling in recent sessions, so has the Australian dollar against the US dollar.”
A fall in the iron ore price and a massive snow storm in the US was weighing on market optimism and putting downward pressure on the Australian dollar, de Garis said.
Continuing expectations of an interest rate cut are also pushing the Aussie dollar lower, with the futures market now pricing in a 34 per cent chance of a rate cut.
Key data out on Tuesday includes the National Australia Bank business survey for December and the ANZ-Roy Morgan weekly consumer confidence survey.
AAP
