Dollar brushes off Fitch’s U.S. credit score downgrade By Reuters

© Reuters. SUBMIT PICTURE: U.S. Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration

By Rae Wee and Harry Robertson

LONDON/SINGAPORE (Reuters) – The dollar hardly budged on Wednesday as financiers shook off Fitch’s downgrade of the U.S. credit score, although the yen comprised ground versus the U.S. currency as traders examined the Bank of Japan’s technique to financial policy.

Rating firm Fitch on Tuesday devalued the United States to AA+ from AAA in a relocation that drew a mad reaction from the White House and shocked financiers, coming regardless of the resolution 2 months ago of a financial obligation ceiling crisis.

It mentioned most likely financial wear and tear over the next 3 years and duplicated down-the-wire financial obligation ceiling settlements that threaten the federal government’s capability to pay its expenses.

There was little response in the dollar, with the euro last flat at $1.098.

The , which tracks the currency versus 6 peers, stood 0.18% greater at 102.18, simply shy of Tuesday’s three-week high of 102.43.

“Even when there’s bad news … there is a behaviour where businesses and people think ‘I need my dollars to pay my invoices and dollar-denominated debts’,” stated Jane Foley, head of FX technique at Rabobank.

“This is why I think there really hasn’t been a huge push-back from this sort of news, because it doesn’t change the fact that people do still need dollars around the world.”

The dollar likewise discovered some assistance from Tuesday’s financial information that revealed U.S. task openings stayed at levels constant with a tight labour market, even as they was up to the most affordable level in more than 2 years in June.

A different report recommended U.S. production may be stabilising at weaker levels.

Elsewhere, the Japanese yen increased 0.55% to 142.53 per dollar and looked set to reverse 3 sessions of losses, with traders still examining the ramifications of a Bank of Japan’s (BOJ) proceed Friday to loosen its grip on rate of interest.

BOJ deputy guv Shinichi Uchida stated on Wednesday that the reserve bank’s choice was focused on making its huge stimulus more sustainable and was not a start to an exit from ultra-low rate of interest.

“I think the market is still trying to get their head around what this whole thing means,” stated Rodrigo Catril, senior currency strategist at National Australia Bank (OTC:).

Sterling was last up 0.12% at $1.279. The Bank of England sets rate of interest on Thursday and the marketplace doubts whether it will be a 25 or 50 basis point boost from the present 5% level.

The Australian dollar fell 0.5% to $0.658, having earlier moved to its least expensive level given that June at $0.657.

It was extending a sharp fall from the previous session after the Reserve Bank of Australia (RBA) on Tuesday held rate of interest constant and signified that it may have completed tightening up.

The New Zealand dollar likewise moved and was last 0.72% lower at $0.611, after information on Wednesday revealed the nation’s out of work rate struck a two-year high in the 2nd quarter.


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