European problems may impact Aussie dollar

Monday 21 May 2012

Article by Mozo

The problems in the eurozone could have a major impact on the Australian dollar, a leading currency strategist has warned.

Richard Grace of the Commonwealth Bank told the Sydney Morning Herald that the ongoing political and financial uncertainty in Greece is proving particularly problematic.

The country was recently forced to accept a huge bailout package from its fellow eurozone members, but there are fears the nation may default on this if new leaders are elected next month.

Mr Grace suggested this could see Australia's currency fall below the 90 cents mark against the US dollar. This could then affect interest rates across the country.

The Reserve Bank of Australia (RBA) recently slashed the cash rate to 3.75 per cent, citing worse than expected employment and inflation statistics as the main reasons for its decision.

Economists are predicting even further rate cuts in the next few months, but events in Greece may sway the RBA one way or the other.

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European problems may impact Aussie dollar
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