- AUD/USD is clearly lacking a directional bias, despite Australia’s outlook downgrade by rating agency Fitch.
- RBA, the reduction of bond purchases could be to help PEOPLE avoid losses.
- The decision of china to raise its budget deficit target and may bode well for the AUD.
The AUD/USD is extending its several hours to play, with sellers refusing to intervene, in spite of the credit rating agency Fitch’s decision to cut Australia’s outlook to negative from stable. The rating agency has confirmed Australia’s prized AAA credit rating.
While Australia’s prized AAA credit rating has been preserved, and the forecasts have been revised downward, citing the impact on the economy and the public finances of the corona virus of the pandemic. Fitch expects the $ 2 trillion economy to contract by 5% this year, mainly due to a sharp slowdown in the second quarter. The economy is expected for the beginning of a slow recovery in the second half by the year 2020.
Until now, however, the news has failed to have a significant impact on the Australian dollar. The pair AUD/USD continues to trade in the range of 0.6550 be 0.6576, which has been in place since Thursday, US trading hours.
The Reserve Bank of Australia has recently one of the lower purchases of bonds, with the three-year fixed rate stabilization around the target, or 0.25%. That seems to be the source of the AUD’s resilience.
For the future, the AUD can draw strength from the decision of China to raise the budget deficit target to around 3.6% of its gross domestic product this year, the previous year, by 2.8%. Essentially, the dragon of the nation to spend more to support the economy.
However, if the united states-China tensions continue to rise, the risk sentiment will likely weaken, pushing the growth-linked Australian dollar lower. China is the world’s Premier, Li, was in the son, a few minutes before the time of the press, saying that his government will resolutely oppose and deter any separatist activities and the search for the independence of Taiwan. Li’s comments come on the heels of the us decision to sell $180 million of arms sales to Taiwan.