The dollar is falling after the downgrade of the US credit rating
The US dollar fell at the beginning of the week on Monday, following Moody's decision to downgrade the sovereign credit rating of the United States by one notch, becoming the last major credit rating agencies to make such a move. Moody's based its decision on the growing volume of US debt, which exceeded 36 trillion dollars, which raised markets concerns about the financial sustainability of the world's largest economy.
The pressure on the US currency was also increased by a series of weak economic data released over the past week, which strengthened expectations that the Federal Reserve may move to cut interest rates twice this year.
The dollar thus ended a winning streak that lasted 4 consecutive weeks, during which it was supported by positive developments in trade relations and an improvement in the indicators of the world economy, especially in connection with rapprochement with China.
On the other hand, US Treasury Secretary Scott Besant said during media interviews on Sunday that President Donald Trump is continuing to impose tariffs in accordance with previous threats on trading partners who do not negotiate in good faith, in a reference to the continuing trade tensions that are worrying investors.
However, a report by the Financial Times pointed to a possible breakthrough, as the United States has started serious trade talks with the European Union, in a step that may pave the way for concluding new agreements, especially after the signing of an agreement with Britain recently.
Trump has also previously talked about opportunities to make agreements with India, Japan, and South Korea, although negotiations with Tokyo are still stalled due to disagreements over tariffs on cars.
Australian dollar rises ahead of expected interest rate decision
On the other hand, the Australian dollar rose today by more than 0.1% to 0.6420 US dollars, recovering part of its recent losses of more than 1% over the past three sessions.
The rise comes ahead of the Reserve Bank of Australia's announcement of its monetary policy decision on Tuesday, amid expectations that the interest rate will be cut by a quarter of a percentage point from 4.10% to 3.85%.
This expectation is due to the slowing pace of inflation, which gives the Australian central bank room to maneuver in light of increasing global economic risks.
Markets are waiting for the next guidance from the central bank, especially after investors reduced their bets on a rapid interest rate cut, driven by improving employment data and calming trade tensions between China and the United States.
