Australian dollar lower as Greece talks stall

THE Australian dollar is lower, weighed down by tensions over Greece’s bailout negotiations with European officials.

THE Australian dollar is lower, weighed down by tensions over Greece’s bailout negotiations with European officials.

At 0700 AEDT on Friday, the local dollar was trading at 77.88 US cents, down from 78.10 cents on Thursday.

A request by Greece to its European partners for a six-month extension to its loan program has been rejected by Germany.

Bank of New Zealand currency strategist Raiko Shareef said that helped the US dollar rally and put downward pressure on the Aussie. “Headlines regarding Greece’s debt standoff drove swings and roundabouts in market sentiment,” he said.

“First, Greece had reportedly requested a six-month extension of the bailout program, but with some significant watering-down of its strictures.

“This sets the stage for another boisterous meeting of Eurogroup finance ministers this evening. It is unclear where the middle ground will be found, but markets seem very confident that a deal will be struck eventually.” Mr Shareef said comments from credit ratings agency Standard and Poor’s about Australian federal government debt were also a drag on the Australian dollar.

S&P said while there is no immediate threat to Australia’s AAA credit rating, it must keep a rein on its growing debt.

“As is too often the case, the headlines were more sensationalist that the story itself. In fact, the S&P sovereign analyst stated that there is no immediate threat to the AAA rating.” Mr Shareef said.

Originally published as Australian dollar lower as Greece talks stall