The dollar dropped after U.S. lost its last stable outlook from the three biggest credit-ranking companies after Fitch Ratings lowered the nation to negative following a congressional committee’s failure to agree on deficit cuts.
Fitch’s outlook on the U.S., which it still assigns its top AAA grade, reflects “declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming,” making the probability of a downgrade greater than 50 percent over two years, the company said yesterday in a statement. Standard & Poor’s and Moody’s Investors Service said Nov. 21 that the so-called supercommittee’s inability to reach an agreement didn’t merit downgrades because the inaction will trigger $1.2 trillion in automatic spending cuts.
The Australian and New Zealand dollars rose toward the highest in a week before euro-area officials meet in Brussels amid optimism leaders are working to fast-track a solution to the region’s debt crisis.
The so-called Aussie gained for a fourth day against the yen as Asian stocks extended a global rally, boosting demand for higher-yielding assets. The currency earlier weakened after the government said it will cut spending by A$6.8 billion ($6.7 billion) to deliver a budget surplus, adding pressure on the Reserve Bank of Australia to lower interest rates. Fitch Ratings upgraded Australia’s long-term foreign- currency issuer default rating to AAA from AA+ before the release of the budget review. The nation now holds the top grade at all three main credit assessors for the first time.
EUR/USD: on Asian session the pair gain.
GBP/USD: on Asian session the pair gain.
USD/JPY: on Asian session the pair showed new week’s high, but receded later.
On Tuesday EMU data includes the 0900GMT release of both the business climate indicator and the economic sentiment survey for November. UK data starts at 0930GMT with the BOE Lending to Individuals, M4, Bankstats and Effective Rates data, while also in the UK today, the UK OBR forecast and Autumn statement from the Chancellor George Osborne are due with the UK Autumn Budget Statement at 1230GMT.US data starts at 1245GMT with the weekly ICSC-Goldman Store Sales data, which is followed at 1355GMT by the weekly Redbook Average and then at 1400GMT by the S&P/Case-Shiller Home Price Index. At 1500GMT, the FHFA Home Price Index is due at the same time as the index of consumer confidence is forecast to rebound to a reading of 44.4 in November after plunging in October to a reading of 39.8. The Michigan Sentiment index rose solidly in November. This is followed at 1530GMT by the Dallas Fed Services Outlook Survey. At 1630GMT, Fed Vice Chair Janet Yellen makes remarks on the global recovery at the San Francisco Fed's Asia Economic Policy Conference in San Francisco. At 0100GMT Wednesday (8pm Eastern), Minneapolis Fed President Narayana Kocherlakota delivers a speech on monetary policy to the Stanford Institute for Economic Policy Research in Stanford.
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