Daily Morning Report 07.07.2016

The Australian dollar fell against its U.S. counterpart on Thursday, after Australia’s credit rating was cut, while the New Zealand dollar gained some ground after the minutes of the Federal Reserve’s latest policy meeting crushed hopes for a near-term rate hike.

AUD/USD slid 0.23% to 0.7504.

Investors remained cautious on the Aussie after Standard and Poor’s downgraded the outlook on Australia’s AAA credit rating from stable to negative.

The ratings agency cited political uncertainty following last Saturday’s inconclusive elections as a possible threat to Australia’s rating in the future.

NZD/USD advanced 0.77% to trade at 0.7185.

Meanwhile, the minutes of the Fed’s June policy meeting released on Wednesday showed that policymakers decided to keep interest rate hikes on hold as they assessed the Brexit impact.

Fed officials agreed that it was “prudent to wait” for additional data before considering another rate hike, according to minutes.

The minutes came after Fed member Daniel Tarullo said the central bank should wait to raise rates, warninf that because interest rates are currently so close to zero, the Fed has limited tools to respond to an economic slowdown.

New York Federal Reserve President William Dudley said on Tuesday that the U.S. economy was on the right track but added that any signs of post-Brexit instability in the European Union could have more severe consequences for the U.S.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 96.11.