In the Asian session on Tuesday, the Australian and the New Zealand dollars declined against their most major counterparts as stocks fell following a downgrade of the U.S. debt outlook by Standard & Poor’s.
Standard & Poor’s cut its ratings outlook on the U.S. to negative from stable on Monday, putting further pressure on policy makers to get the nation’s fiscal house in order.
While S&P kept its Triple-A rating on the world’s largest economy, the outlook cut reflects the material risk that Congress will fail to address budget concerns in the next three years.
S&P worries that policy makers may not reach an agreement on how to address medium- and long-term budgetary challenges by 2013.
Thus far, Japan’s Nikkei 225 index lost 1.5 percent, Hong Kong’s Hang Seng fell 1.4 percent, China’s Shangai composite index slipped 1.5 percent, New Zealand’s NZX 50 index dropped 0.6 percent, South Korea’s Kospi declined 1 percent, Taiwan’s main index plunged 1.2 percent, Australia’s S&P 200 index lost 1.3 percent and the All Ordinaries index was 1.4 percent lower.
Members of the Reserve Bank of Australia’s monetary policy board continued to feel that their current stance was appropriate, minutes from the April 5 meeting revealed today.
The board members also noted that rising global commodity prices pose a challenge for many of the advanced economies, and the surging Australian dollar is weighing on trade-exposed sectors.
At the meeting, the board maintained the benchmark interest rate at 4.75 percent.
The Australian dollar is currently worth 1.0465 against the U.S. dollar and 86.40 against the yen, down from yesterday’s close of 1.0512 and 86.94, respectively. If the aussie weakens further, it may likely target 1.040 against the greenback and 86.0 against the yen.
The Australian dollar that closed yesterday’s deals at 1.0139 against the Canadian dollar is now trading at a 5-day low of 1.0105. The next downside target level for the aussie is seen at 1.005.
Against the euro, the Australian dollar is now worth 1.3590, compared to Monday’s closing value of 1.3544. On the downside, 1.362 is seen as the next target level for the Australian dollar.
The New Zealand dollar is presently worth 0.7850 against the US dollar and 64.80 against the yen. If the kiwi slides further, it may likely target 0.775 against the greenback and 64.5 against the yen. The kiwi-greenback and the kiwi-yen pairs were worth 0.7907 and 65.40, respectively at yesterday’s close.
The New Zealand dollar is currently trading at 1.8120 against the European currency with 1.821 seen as the next downside target level. At yesterday’s close, the euro-kiwi pair was quoted at 1.7994.
Looking ahead, Japan’s consumer confidence index for March is due at 1:00 am ET.
The Eurozone current account for February and the preliminary PMI reports for April from the major European economies are slated for release in the European session.
At 7:00 am ET, Canada’s CPI for March is due.
The U.S. housing starts and building permits for March, Canada’s leading indicators for March, wholesale sales for February and the housing starts for March are expected at 8:30 am ET.
