Global credit rating agency Fitch recently came out with its Long-Term Foreign-Currency Issuer Default Rating (IDR) analysis for Australia. The rating giant held the Pacific major’s ‘AAA’ status intact with a negative outlook.
Strong institutions and an effective policy framework are the major positives cited in the report that helped the credit rating institute to keep Australia’s ‘AAA’ stand. However, uncertainty around the medium-term debt trajectory following the significant rise in public debt/GDP caused by the response to the pandemic weighed on the outlook, per the analysis.
The report further said, “Fitch estimates real GDP contracted by 2.8% in 2020, against a ‘AAA’ median contraction of 3.8%. We forecast the economy to expand by 3.8% in 2021 and 2.7% in 2022, driven by robust consumption as households draw down high accumulated savings from government relief measures.”
It’s worth mentioning that the rating statement cites the Aussie labor market on a stable path to recovery.
AUD/USD eases…
Following the news, AUD/USD steps back from the intraday high of 0.7892, to currently around 0.7880. However, the risk-on mood keeps the quote on firm footing.
Read: AUD/USD: Bulls catch a breather at highest since March 2018, keep eyes on 0.7900
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