CBA: Expect only a small AUD reaction on Australia’s AAA rating cut

Analysts at Commonwealth Bank of Australia (CBA) expressed their thoughts over the impact on the Aussie should Australia lose its AAA rating.

Key Points:

They expect only a small AUD reaction if the rating is cut

Credit ratings are not a fundamental driver of Aussie

Commodity prices, current account balances, and interest rate differentials are much more important

AUD may have a knee-jerk fall reaction