EU Morning Report – Moody’s downgrades Greek debt to Junk!
Tuesday, June 15th, 2010Moody’s downgrades Greek debt to Junk!
- Markets seemed to shun the fear of an EU wide debt crisis yesterday as global risk appetite picked up. It seems that no news is good news especially when the market was heavily pricing in risks of defaults. With a record number of short positions feeling a little anxious on the day and a fantastic Industrial production report coming in higher than expected at 0.8%, markets scrambled to cover their shorts as well as short term spec accounts dipping their toes in some long positions. The report is considered as a forward looking report on the health of an economy as it reacts quickly to changes in the business cycle as well as consumer confidence and employment levels. As the session went on and the EURUSD climbed to 1.2297 Moody’s decided to downgrade Greece is debt to junk status giving the much needed excuse to offload those short term speculative long positions just before the London Fix was coming to an end. Overall price action on the day was between 1.2162 – 1.2297.
- In the US yesterday we saw Fed President Bullard reject speculation that the European debt crisis will push back any Fed policy decisions. He says that policy will be dictated by the actual US economic recovery however he says the recovery will have to develop further before any rate hikes are delivered. US stocks traded in line with European wide sentiment with the S&P making highs of just above the 1105 level however as the session went on and the Moody’s downgrade was announced traders rushed for the exit once more and the market ended up closing down 0.2% at 1091 points. USDJPY price action yesterday was between 91.39 – 92.11.
- In the UK the focus will be on the latest CPI figures so as to gauge the direction of UK inflation pressures. Last CPI reading stubbornly showed a year on year figure of 3.7% prompting assumptions that the BoE may be forced to enter a preemptive rate hike so as to tame such price pressures. GBPUSD price action was between 1.4501 – 1.4808.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.2275 with a preference to enter into Short positions at 1.2265
- § The USDJPY pivot point is at 91.75 with a preference to enter Short positions at 91.70
Today’s calendar and market movers:
- § UK Consumer Price Index for expected at 3.5% year in year ending May
- § EU Employment for Q1 with last month reading as -0.2%
- § EU Trade for April expected at 3.7 bio
- § US NAHB for June forecasted at 21
Equity Markets:
- US equities closed negative yesterday with the S&P500 down by -0.2% and the DJIA down by -0.18%. The European bourses were positive yesterday with the FTSE up 0.74% the DAX and the CAC closing at 1.28% and 1.98% respectively. The NIKKEI and the HSI at the time of writing is 0.08% and 0.20% respectively.
Written by Easy-Forex
