Australian Dollar jittery following Europe credit downgrades

THE Australian Dollar took a slight knock against the US Dollar as news of Europe’s credit downgrade reached the market.

On Friday, S&P had downgraded nine of Europe’s largest economies, including France – stripping them of their prized AAA ratings.

The ratings agency also gave warning that the third largest economy of the Eurozone, Italy, was being downgraded further from their rating of A to BBB+.

Emma Lawson, currency strategist from the National Australia Bank, said that the recent downgrades have added to the overall concern of the European Union’s ability to come up with a solution for the current debt crisis. She also said that particular concern was expressed by traders regarding the impact on the rescue fund to combat the crisis – the European Financial Stability Facility (EFSF).

Ms Lawson also said that job advertisements had dropped by 0.9%, according to data from ANZ bank, indicating that the employment sector is weakening which is likely to put negative pressure on the Aussie Dollar.

She expected this week’s trade to be dominated once again by the crisis events unfolding in Europe, with particular attention on the ability of Greece to obtain the necessary funding they require.

Australian Dollar exchange rates

AUD/GBP: 0.6577

AUD/EUR: 0.7905

AUD/USD: 1.198

AUD/JPY:  78.84

Exchange rates as of 10:34, 16 January 2011

Composed by Chad Frieslich

:: Note: The above exchange rates are based on “interbank” rates.
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