Aussie fell to a 2-week low this morning, after reports suggested that Australia’s credit rating could be put at risk by disagreement over the Federal budget. According to the AFR report, quoting S&P’s lead sovereign analyst Craig Michaels, Australia’s AAA credit rating could be reviewed if the Coalition government is unable to pass at least “some” of the A$37 bln savings in the federal budget announced on May 13. Aussie-dollar opened at $0.9330 and briefly managed a high of $0.9336 before it turned southward. Although later reports suggested that S&P was not saying a review wasimmininent, aussie-dollar continued to weaken, touching an initial low of $0.9307. It paused as the market waited for the RBA minutes, which provided little relief for the aussie. The market then took aim at stop-loss selling below $0.9300 and successfully went through those, pushing the rate down to a $0.9292 low, its worst since $0.9271 traded on May 6. There’s been only a mild recovery off that low, with aussie-dollar last at $0.9293. Very little reaction seen so far to remarks by RBA assistant governor Guy Debelle today. Further stops are noted below $0.9270, with strong demand then seen lower at $0.9255/50.
