Fitch revises Australia's outlook to negative, affirms rating at 'AAA'.
Says negative outlook reflects significant impact global coronavirus pandemic has on Australia's economy and public finances.
Forecasts Australia's GDP to contract by 5% in 2020, driven by a plunge in economic activity during Q2 due to virus containment measures.
Says expect gradual economic recovery in Australia to begin in second half of 2020 and forecast GDP to grow by 4.8% in 2021.
Says Australia's banking system is relatively well positioned to manage current shock.
Fitch also notes, importantly, that "domestic restrictions are now being eased, but border controls are likely to remain in place for some time, constraining international tourism and student service exports. Risks are tilted to the downside given uncertainties around the spread of the coronavirus domestically and globally.
A resurgence of cases in Australia could lead to the re-imposition of domestic restrictions. The global outlook could also be worse than we currently forecast if the emergence from current lockdown measures is slower than we anticipate or if there is a second wave of infections. Australia's exports would be particularly affected if China's recovery were to falter."
One of the key observances is that international and bilateral trade tensions with China also pose risks. AUD is battling against a full army of risks and headwinds and technically, bulls are taking on a critical resistance level with the 200 DMA around one cent away.
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