AUD/USD Spikes to Near 0.6450 Following US Credit Downgrade

AUD/USD Surges Near 0.6450 on US Credit Downgrade and Trade Talk Uncertainty

The Australian Dollar (AUD) strengthened sharply against the US Dollar (USD) on Monday, with the AUD/USD pair spiking to just below 0.6450 during the European session. The rally was triggered by a broad weakening of the US Dollar following a downgrade of the United States' sovereign credit rating by Moody’s Investors Service.

Moody’s cut the US long-term issuer and senior unsecured ratings from Aaa to Aa1, citing rising fiscal deficits and mounting debt levels. The downgrade rattled investor confidence in the Greenback, pushing the US Dollar Index (DXY) down to around 100.20, its lowest level in a week.

In addition to the downgrade, uncertainty looms over the potential for resumed US-China trade negotiations. Market participants are closely watching for confirmation on whether US President Donald Trump will travel to China to engage in trade talks — a development that could influence risk sentiment and currency flows.

The combination of a weaker dollar and renewed focus on US-China trade dynamics has benefited commodity-linked currencies like the Aussie. However, traders remain cautious, awaiting further signals from policymakers and upcoming US economic data for a clearer direction in the FX market.