Home Daily Commentaries Fitch downgrades US Treasuries to AA+ from AAA rating

Fitch downgrades US Treasuries to AA+ from AAA rating

Daily Currency Update

Fitch rating agency followed S&P in lowering the rating of US Treasuries to AA+ from AAA. The downgrade was a possibility during the debt ceiling crisis in the US recently and has now become a reality. EURUSD was spurred on by the news despite US yields rising as well. The pair rose from 1.0985 up to a high of 1.1020 last night before retracing back to 1.0980 levels this morning. GBPUSD was also boosted by the news but less so than EURUSD and Cable is now trading down this morning.
USD's resilience looks strong as the currency has shrugged off Fitch's downgrade and recent soft data. The greenback is enjoying boosts from safe-haven currency demand as its loss following Fitch's decision has reversed.

Key Movers

Later today markets are expecting ADP jobs data from the US as today is light on the data front. Eyes turn to tomorrow's data with the Australian trade balance, China's Caixin PMI services, further US jobs data, and most importantly the BoE's interest rate decision.
The implied interest rate change for the BoE has reduced slightly this morning to a hike of 31.9 bps meaning markets are expecting most likely a 25 bps hike from the central bank but there is a chance of an increase by 50 bps as well.

Expected Ranges

  • GBP/USD: 1.2720 - 1.2845 ▼
  • GBP/EUR: 1.1600 - 1.1700 ▼
  • GBP/AUD: 1.9290 - 1.9500 ▲
  • EUR/USD: 1.0940 - 1.1050 ▼