AUD Falls as Stimulus Plan is Rejected

The Australian dollar declined against the U.S. dollar, the Japanese yen and the euro today as the country’s senate refused to adopt the Prime Minister’s stimulus package worth of $27.4 billion.
The Aussie has been growing recently after Kevin Rudd proposed fiscal and liquidity measures that would cost the budget A$42 billion but would gradually help the economy to recover. Traders were confident about the Australian currency for several days but those gains were quickly erased by rejection of the plan.
The decline of the imports in China also press on the Australian economy because China is Australia’s second largest exporting market by volume. It’s quite interesting that the New Zealand currency also declined after this news and fell even against the Australian dollar.
The currency analysts all as one say that for a country that is so close to a technical recession any such delay in adopting the economy-stimulating plans is a negative signal. The Forex market participants will remain short on AUD for as long as the plan gets postponed.
AUD/USD fell from 0.6545 to 0.6485 as of 9:23 GMT today. AUD/JPY declined from 59.16 to 58.11, while EUR/AUD rose from 1.9673 to 1.9810.

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