Moody’s calmed investors by keeping the credit rating a solid Triple A for the US. This lowered fears and casued risk appetite – the dollar is falling across the board.
After Britain’s credit downgrade, there were strong fears that this could happen in the US. Today, Moody’s had a good mood for the US dollar. From Reuters:
“The U.S. government triple-A is safe,” Pierre Cailleteau, team managing director of Moody’s Sovereign Risk Group, said at a media briefing on sovereign credit ratings held in Tokyo.
Moody’s has a stable outlook on the U.S. rating, which indicates a change is not expected over the next 18 months.
The market reaction was big sigh of relief – the worst scenario didn’t happen. A credit downgrade for the US could swirl the world’s financial system. As this did not happen, a safe haven isn’t necessary, and risk aversion made way for risk appetite – the dollar falls.
EUR/USD climbed from 1.3850 to almost 1.40. GBP/USD went up from 1.6250 to 1.6230, and also the Candian dollar gained today. USD/CAD fell to 1.15. There’s a strong resistance line there for the loonie, so the Canadian dollar has little room to make gains.
This good, risk-appetite news is stopping the Iran-election effect that supported the US dollar.
A good mood, courtesy of Moody’s is alson expected in the stock markets.
Happy forex trading!