The Australian and New Zealand dollars pared losses against their U.S. peer after the European Union agreed to spend 120 billion euros ($149 billion) to stimulate growth and create jobs.
The currencies still closed lower against most of their major peers as speculation EU leaders meeting in Brussels will fail to agree on a strategy to solve the sovereign-debt crisis cut demand for commodity-linked assets.
“Given the correlation of the markets you see right now, I think it’s part of a general risk-off move,” David Grad, a foreign-exchange strategist at Bank of America Corp. in New York, said in a telephone interview. “Given the high-beta status of the Aussie and Kiwi in this risk environment, that’s primarily what’s been behind the move.” High-beta currencies tend to have the greatest volatility.
The Aussie fell 0.4 percent to $1.0045 in New York yesterday, after earlier dropping as much as 0.8 percent. The currency traded 0.7 percent stronger at 79.81 yen.
New Zealand’s dollar, known as the kiwi, declined 0.4 percent to 78.83 U.S. cents. It rose 0.8 percent to 62.62 yen.
The Standard & Poor’s GSCI Index of 24 raw materials decreased 1.7 percent as commodities fell the most in a week on European skepticism and a report that showed U.S. jobless claims hovered near the highest level of the year.
Most foreign-exchange funds rose in May amid European crisis turmoil, which spurred investors to seek safety in the dollar and yen while shunning higher-yielding currencies, according to a Parker Global Strategies LCC Index.