Australian And NZ Dollars Extends Slide On Risk Aversion

05:16, 21st December 2012

(RTTNews) - During early European deals on Friday, the Australian and New Zealand dollars extended fall against other major currencies amid risk aversion as U.S. budget talks deadlocked after U.S. House Republicans cancelled a vote on speaker John Boehner's "Plan B" bill due to lack of support.

"The House did not take up the tax measure today because it did not have sufficient support from our members to pass," Speaker John A. Boehner said in a statement. "Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff."

If no agreement can be reached by the end of the year, automatic spending cuts and tax increases will go into effect - measures that many analysts agree would push the country back into recession.

The aussie lost 0.61 percent against the greenback and fell to 1.0421, its lowest level since December 4. If the aussie extends slide, it is likely to break 1.035 level. The pair finished yesterday's deals at 1.0485.

Against the loonie, the aussie is trading at a 10-day low of 1.0331 with 1.03 seen as the next support level. At Thursday's close, the pair was quoted at 1.0359.

Germany's consumer sentiment is set to deteriorate in January, survey results from market research group GfK showed today.

The forward-looking index fell to 5.6 from a revised value of 5.8 in December. The index was forecast to remain unchanged at 5.9 points, the originally estimated figure for December.

The aussie that closed Thursday's trading at 1.2638 against the European currency slipped to as low as 1.2680. The aussie may seek next support level at 1.275.

The kiwi followed similar trend, declining to more than 2-week low of 0.8249 against the U.S. dollar. The kiwi thus lost 1.10 percent against the greenback from yesterday's close of 0.8341. On the downside, the kiwi may find target level at 0.82.

Against the euro, the kiwi reached 1.6024 for the first time since October 17. The next downside target level for the kiwi is seen at 1.61. The pair ended yesterday's deals at 1.5888.

The NZ currency fell to a 9-day low of 69.35 against the yen and more than a 2-week low of 1.2647 against the aussie, compared to Thursday's close of 70.38 and 1.2576, respectively. On the downside, the kiwi may break 69.00 against the yen and 1.27 against the aussie.

Looking ahead, Canada CPI for November and GDP for October, as well as U.S. personal income and spending data for November, final results of Reuters/University of Michigan's consumer sentiment index for December are due in the New York session.