I posted on the ratings question earlier:
- Australia press: 'AAA could go at any time'
- ANZ on Australia's credit rating 'in the spotlight as MYEFO approaches'
- Australian Treasurer 'reviewing' tax to raise more revenue
Here's a bit more, this time some thoughts from Commonwealth Bank of Australia (CBA) analysts:
- They expect only a small AUD reaction if the rating is cut
- Credit ratings are not a fundamental driver of Aussie
- Commodity prices, current account balances, and interest rate differentials are much more important
- AUD may have a knee-jerk fall reaction
CBA remind us that back on 7 July 2016 the currency fell less than 1 US cent after S&P changed its outlook on the AAA rating
- The AUD then recovered virtually all of its losses within thirty minutes of S&P's actions
- The last two times the Australian government's credit rating was downgraded was on 6 December 1986 and 24 October 1989. The Aussie showed no reaction to the 1986 rating cut and decreased temporarily by 0.50 US cents following the 1989 rating cut