AUD/USD Sinks as S&P Downgrades Australian Credit Rating Outlook
- Australian Dollar declines against its major counterparts
- S&P lowers Australia’s credit rating outlook to negative
- The ratings agency said it was due to fiscal vulnerabilities
Keep an eye on short-term trends for Australian Dollar crosses using the Grid Sight Index (GSI) here.
The Aussie Dollar declined against its major counterparts after S&P Global Ratings downgraded Australia’s credit rating outlook to AAA negative from AAA stable. Simultaneously, ASX 200 futures declined suggesting the Australian Dollar’s movement was based on risk aversion.
S&P mentioned that the lower outlook was in part due to fiscal vulnerabilities. The ratings agency added that the country’s high indebtedness moderates its strengths. A lower credit rating may drive Australian borrowing costs higher as traders price in a relatively greater risk of default. This may translate into an overall increase in the cost of capital, weighing on economic growth and nudging the RBA toward further easing.
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