Downgrades are serious business

The downgrades of New Zealand have had some time to sink in and there's nothing positive to be said. I've read all the chatter about NZD and at first the talk about a fall to 0.7100 sounded overly bearish but now it sounds realistic.

1. Foreign investors hate downgrades, and there is lots of foreign money in New Zealand
2. The carry trade is over, if it wasn't already.
3. The RBNZ isn't going to hike rates. This pushes up funding costs and puts pressure on the gov't to control spending.
4. It's bad for local sentiment. Tough to price in a hit to the national ego but there's always a cost.
5. Just look at the US downgrade. It was telegraphed for a month and it took weeks before all the consequences were felt.

Some indicators might be oversold but I can't envision a bounce of more than 100-150 pips in NZD.