AUD/JPY drops below key support as S&P downgrades outlook for Australia

AUD/JPY reports losses as S&P puts Australia's AAA rating on a negative watch.
S&P cites recent deterioration in fiscal metrics as a key reason for the downgrade in outlook.

Omkar Godbole FXStreet Contributor

AUD/JPY is losing altitude at press time, as a decision by a prominent rating agency to downgrade Australia's outlook is drawing offers for the Aussie dollar.

The currency pair is currently trading near the ascending 50-hour moving average at 66.62, representing a 0.73% drop on the day. The spot hit a session low of 66.47 soon before press time.

Standard & Poor's, one of the big three ratings agencies, put Australia's AAA credit rating on a downgrade watch on Wednesday by revising the country's outlook to negative, citing substantial deterioration in the nation's finances and the increased risk of deeper economic recession due to the coronavirus outbreak.

Australia recently announced a fiscal stimulus, which is reportedly 11% of its gross domestic product. The Reserve Bank of Australia cut rates to 0.25% last month and launched a yield curve control program. Even so, fears of a deeper economic downturn continued to rise.

Apart from the S&P decision to downgrade Australia's outlook, the waning risk sentiment seems to be adding to bearish pressures around the AUD/JPY pair. The futures tied to the S&P 500 futures are reporting a 0.53% drop at press time. The index closed Tuesday with marginal losses, having jumped by 7% on Wednesday.

The renewed risk-off could be associated with increasing coronavirus cases in the US. The world's largest economy recorded 1736 new coronavirus deaths on Tuesday, the highest in a single day, pushing the nationwide tally to 12,722, according to John Hopkins University.

Technical levels

AUD/JPY

Overview
Today last price	66.64
Today Daily Change	-0.46
Today Daily Change %	-0.69
Today daily open	67.1

Trends
Daily SMA20	65.58
Daily SMA50	69.74
Daily SMA100	72.37
Daily SMA200	73.01

Levels
Previous Daily High	67.68
Previous Daily Low	66.38
Previous Weekly High	67.27
Previous Weekly Low	64.4
Previous Monthly High	71.52
Previous Monthly Low	59.9
Daily Fibonacci 38.2%	67.18
Daily Fibonacci 61.8%	66.87
Daily Pivot Point S1	66.43
Daily Pivot Point S2	65.75
Daily Pivot Point S3	65.13
Daily Pivot Point R1	67.72
Daily Pivot Point R2	68.35
Daily Pivot Point R3	69.02

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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