By Chris Zappone
If Europe’s not yet in your holiday plans it might soon be, with the Australian dollar rising to record levels against the euro.
The Aussie dollar today reached as high as 73.28 euro cents - just shy of the record 73.32 euro-cent level touched on September 13 - before easing back below 73 euro cents in recent trading.
The Australian dollar rise in recent weeks to above parity with the greenback as diverted attention from its rally against most other currencies. Its level against the euro is near its highest since the pan-European currency launched in January 1999 while it remains close to a 25-year high against Britain’s pound.
The dollar may have further to rise, particularly against currencies in Europe, as worries about the region’s debt loads has again resurfaced in global markets, analysts say.
“One of the biggest losers overnight was the euro which has come under pressure as fears grow that Ireland’s debt woes may be spiralling out of control,” said Melbourne-based Go Markets sales trader Chris Gore.
Bond traders have dumped the nation’s debt amid fears it would need a bailout from the European Union. Those concerns pushed down the value of the euro against other currencies, including the Aussie, just as leaders from the G20 nations - which includes Australia - gathered in Seoul, Korea.
Mr Gore believes the Aussie could soon purchase 74 euro cents. All that’s needed to push the currency higher is either renewed confidence in the global economy or more weakness coming from Europe’s markets.
But the general increase in global market fears over the past day has knocked the Aussie down against the greenback, as well.
“These European debt fears also remain a driver of the broader currency markets,” said Mr Gore.
Greenback gains
Those debt fears, though, have prompted some sell-down of the Australian dollar as investors retreat from assets deemed to be more risky to the US dollar. That shift has dragged the Aussie dollar to below parity, with the currency recently buying 99.4 US cents.
However, Aussies looking to visit relatives and friends in the UK, should be cheered by the weak levels of the pound. The Aussie is continuing to trade near 25-year highs against the pound, buying 61.8 pence.
czappone@fairfax.com.au
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