The U.S. dollar barely reacted to Fitch's downgrade of the United States' credit rating, though the yen gained against the dollar as traders assessed the Bank of Japan's monetary policy approach.
Fitch on Tuesday downgraded the U.S. credit rating to AA+ from AAA, citing likely fiscal deterioration over the next three years. However, there was little reaction in the dollar. The euro was flat against the dollar, and the dollar index was up marginally.
Some analysts said the need for dollars globally still supports the currency, even in the face of negative news. U.S. economic data on job openings and manufacturing also provided some dollar support.
The Japanese yen rose 0.55% against the dollar as traders assessed the implications of the Bank of Japan's move last Friday to loosen its grip on interest rates. A BOJ official said the move was aimed at making stimulus more sustainable, not an exit from easy policy.
The Bank of England sets interest rates on Thursday, and the market is uncertain if it will be a 25 or 50 basis point hike. The Australian and New Zealand dollars fell sharply after the Reserve Bank of Australia signaled it may be done raising rates.
