The two biggest movers among the majors this morning were the Australian and New Zealand dollars. High-flyers for the past few weeks, these to currencies have shown they are just as sensitive to risk appetite when it is plummeting as it is soaring.
However, beyond the general ebb and flow of the market, both members of the commodity bloc were influenced by their own economic drivers for the day. In Australia, the government’s Federal budget offered reason to doubt the economy’s position as one of the strongest in the industrialized world. Officials said the national deficit would be A$32.1 billion through the end of the 2009 fiscal year (ending in June) and would further balloon to $57.6 billion the following year as the government embarks on an unprecedented building plan to turn the domestic economy around. However, in the near-term, the forecast stood for a lingering recession and steady rise in unemployment. In New Zealand, RBNZ Deputy Governor Spencer feigned verbal intervention when he said he was disappointed with the pass through of the central banks last 50 bps cut and that he was disappointed that the kiwi didn’t see a bigger reaction to the event. He went on to suggest there is scope for further easing.