AUD/USD Drifts Below 1.04; NZ Follows Suit

Australia’s dollar remained lower after its biggest drop in more than a week versus the greenback after Cyprus’s parliament rejected a bank-deposit levy needed to secure a bailout, sapping demand for high-yielding assets.

Government bonds in Australia and New Zealand rallied as the impasse threatened to reignite the crisis in Europe, boosting the allure of haven securities. The New Zealand dollar, nicknamed the kiwi, fell against most major peers as the government said the country’s most widespread drought in at least 30 years reduces pressure to raise interest rates.

“The U.S. dollar is bid at the moment because of the uncertainty in Europe, and that’s putting other currencies on the back foot, including the Aussie and kiwi,” said Richard Grace, the Sydney-based chief foreign-exchange strategist and head of international economics at Commonwealth Bank of Australia. “The Cypriots have to go back to the drawing board. The danger is they’re forced to implement these bank levies, and the issue of a tax on deposits spreads to other areas of Europe.”


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