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Forex Market
USD: Moody’s Downgrade Sparks Two-Way Action
The USD swung in both directions Friday as markets reacted to a late-session credit downgrade. Moody’s cut the U.S. rating to Aa1 from Aaa, citing rising debt concerns.
While immediate reactions were muted, equities softened slightly after-hours and USD/JPY pulled back ~20 pips.
- EUR/USD hit 1.1219, dipped to 1.1131
- GBP/USD peaked at 1.3333, then dropped to 1.3251
- USD/JPY climbed to 146.08 before easing
- USD/CAD rose to 1.3995
AUD: Inflation Fears Curb Early Strength
AUD/USD initially benefited from local strength (ASX +0.6%, Real Estate +2.3%), reaching a high of 0.6436.
However, the pair reversed course after University of Michigan data showed inflation expectations rising (1Y: 7.3%, 5–10Y: 4.6%), prompting risk-off positioning.
- AUD/USD dipped to 0.6394 before closing at 0.6404
- Trading range: 0.6388–0.6436
Key Economic Data Ahead (Sydney Time)
General Market
Wall Street
U.S. equities closed higher in a broad-based rebound, overcoming late selling triggered by the Moody’s downgrade.
Support came from housing data and improved risk tone.
- Dow Jones +0.8%
- S&P 500 +0.7%
- Nasdaq +0.5%
Asia-Pacific
Chinese equities drifted lower into the weekend, but Australia outperformed.
- Hang Seng -0.4%, Shenzhen -0.4%
- Nikkei flat, ASX +0.6%
Europe
Stocks opened strong on bond buying, but gains narrowed toward the close.
- FTSE +0.6%, CAC +0.4%, DAX +0.3%
- Brent crude rebounded to $64.60
Headlines to Watch
- Fed Speak Watch: Multiple FOMC voices today (Bostic, Musalem, Hammack, Daly). All are 2025 voting members, potentially influencing rate path sentiment.
- USD Sentiment Post-Moody’s: Market focus remains on any follow-through USD softness and U.S. Treasury market moves following the downgrade.
Mid-market rates.
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