The Australian dollar fell below parity against the U.S. dollar in Asian trading on Monday for the first time since December 2011 as Greece's failure to form a government reduced demand for high-yielding currencies.
Coalition talks in Greece continued throughout the weekend with party leaders failing to form a government, forcing Greek President Karolos Papoulias to call a final meeting to be held Monday.
Adding to negative sentiment, German Chancellor Angela Merkel lost an election in North Rhine-Westphalia, raising doubts that her party will be able to stay in power after next year's general election.
The Australian dollar that ended Friday's trading at 1.0014 against the U.S. dollar slipped to 0.9998 in early Asian deals. If the aussie-greenback pair weakens further, it may target the 0.990 level.
The Australian currency has been declining against the U.S. dollar since the beginning of this month as the Reserve Bank of Australia's bigger-than-expected half percentage interest rate cut dragged down the currency.
The RBA cash rate was slashed by 50 basis points to 3.75 percent on May 01 in a bid to support economic growth. The rate cut was steeper than the 25 basis point-reduction expected by economists.
RBA Governor Glenn Stevens said in a statement that the decision was based on the Policy Board's view that economic conditions have been somewhat weaker than expected amid a moderation in inflation.
The central bank has retained the cash rate at 4.25 percent at each of the past three meetings after reducing it by a quarter point each in November and December 2011.
The Aussie also extended its slide in the subsequent days as traders expressed concerns about the recent elections in France and Greece and their potential impact on efforts to address the European debt crisis. Australia's wider-than-expected trade deficit also weakened the aussie early last week.
However, Australia's strong jobs data helped Aussie to gain over a percent against the greenback last Thursday, but the pair pulled back on Friday. The Australian dollar has lost more than 4 percent against the greenback thus far this month.
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.