It was a busy day for fundamentals and price action across the comm bloc today. Before fundamentals were even considered, the Aussie, Kiwi and Canadian dollars were all already under selling pressure thanks to a sharp declines across commodities spectrum. Key moves for these currencies were the near-2 percent drop in crude and 1.9 percent plunge in spot gold prices.
And while the commodity-sensitive pair’s were already under duress, fundamentals would ultimately add to the downside moves for both the loonie and kiwi. Early in the Asian session, the RBNZ delivered an unsurprising rate decision. Governor Alan Bollard held rates unchanged at the record high 8.25 percent; but there was a notable change in the tone of the statement that followed the decision. The central banker suggested growth would cool more quickly than expected thanks to a drought combined with falling consumer and business confidence, faltering housing market and stiflingly high currency. The BoC was equally dovish in its monetary policy report with forecasts for domestic growth to cool to its slowest pace since 1992 and projecting the credit crunch to last through 2010. This is interesting rhetoric for a bank that has taken to 50bp cuts.