Forex Asia Review – Aussie falls after PM Gillard raises speculation of rate cut

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Euro marked a seven decline against the dollar, and is going into the eight day, which is the longest run since September 2009. Risk aversion is high amidst political uncertainty in Europe, particularly in Greece, which is struggling to form a government after Sunday’s elections.

The weekend vote fell far short of a majority for any party. The New Democracy party leader Samaras (who is pro-bailout though looking for renegotiation) failed to form a coalition government. Second place Syriza party (which is anti-austerity measures) has another two days left to raise a coalition. This political uncertainty is risking the bailout plan and the EU/IMF might not give the bailout which means Greece will  be out of money in June.

EURUSD fell in the Asian session, to 1.2964, not far from a 3-1/2 month  low reached on May 7.

Euro slid 0.4 percent to 103.38 yen after falling to a 2-1/2 month low of 103.19 on May 7, the lowest since February 16.

USDJPY has been range bound since May 7, hovering between 79.70 and 80.06.

The Australian dollar fell further against the US dollar after Prime Minister Julia Gillard said returning the budget to a surplus gives the central bank maximum room to move on interest rates, raising speculation of another rate cut. AUDUSD dropped to 1.0052 from 1.0119.