The Australian dollar has bounced back today, recovering losses earlier in the session on the back of a downgrade by ratings agency standard and poor.

At 9.49am(GMT) the Aussie dollar was trading at  US75.36c up from US74.66c earlier in the session

After recent turbulence in the Australian economy and a lack of government action, the S&P ratings agency downgraded Australia’s outlook from stable to negative,

“The negative outlook on Australia reflects our view that without the implementation of more forceful fiscal policy decisions, material government budget deficits may persist for several years with little improvement,” S & P noted

“Ongoing budget deficits may become incompatible with Australia’s high level of external indebtedness and therefore inconsistent with an “AAA” rating.” they added.

The also mentioned that without a majority government, Australia may have hard time moving forward and some important decisions may be put off to a later date,

“Given the outcome of the July 2 double-dissolution election, in which neither of the traditional governing parties may command a majority in either house, we believe fiscal consolidation may be further postponed,” the ratings agency said.