S&P affirms US sovereign rating at AA+ with stable outlook
|Early Wednesday morning in Asia, late-Tuesday for the rest, global rating agency Standard and Poor, mostly known as S&P, confirmed the US sovereign rating at AA+/A-1+ while keeping the outlook stable.
In doing so, the rating giant confirms America is lesser rated than Australia while saying, “Ratings for the US are constrained by high general government debt and fiscal deficits, both of which worsened in 2020,” per Reuters.
The news also quoted S&P while stating, “Outlook for the US remains stable, reflecting the expectation of rapid economic growth this year and next as the pandemic recedes.”
Despite sluggish news, upbeat statements couldn’t be ignored from the S&P report mentioning, “Expect gradual withdrawal of unprecedented US fiscal stimulus to stabilize net general govt debt burden around 110% of GDP in next couple of years. US dollar's status as the world's premier reserve currency, and size and depth of the US financial market, should sustain policy flexibility.
FX implications
Following the news, AUD/USD drops to 0.7739, from 0.7745, as it heaviest the risks and favors the US dollar due to safe-haven demand. However, the market reaction to the news could have been more visible if the pre-Fed trading lull isn’t active.
Read: Wall Street Close: Stocks pull back following record high open as FOMC rate decision looms
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.