Forex Fundamental Analysis
Moody’s is perhaps trying to portray itself as being even-handed. Hot on the recent downgrade of Irish credit to junk status, the ratings agency has suggested that it may downgrade the credit rating of the world’s largest economy (and one of the world’s most indebted nations) the USA.
Today’s chapter in the sovereign debt story is that the ratings agency Moody’s has decided to reduce its rating on Irish debt to “junk” status. The downgrade took the rating one notch lower from Ba1 to Baa3.
The next nation in the Eurozone sovereign debt cross-hairs is Italy. Doubts are being expressed that Italy will be able to service its debts and so the yield on Italian bonds is rising, making a default more likely.
In order to stimulate their economies, many of the world’s central banks slashed their interest rates to historic levels or even zero (Japan). In this case, the idea was to stimulate growth and spending by making money “cheap”.
Last week saw US and Japanese markets moving forward whilst Europe stagnated or retreated. In Europe over the course of the week, the FTSE stood still gaining just 0.01%, closing at 5990.6; the Dax dipped by 0.23% to close at 7402.7; the CAC weakened by 2.3% to end the session at 3913.6.
This week, we have a bearish bias on USD, a neutral stance on EUR, and views on all the major currencies. Check them out in this weekly snapshot.
This week, one of the three major ratings agencies, Moody’s, downgraded its evaluation of Portugal’s credit worthiness to “junk”, a move that has infuriated the Portuguese and angered the European Commission.
Japan has the highest debt burden of any industrialised nation and it has decided not to go to the market to raise these funds. But, if lenders were to lose confidence in Japan’s ability to meet its obligations, the cost of servicing existing debts would rise.
The whole point of the financial bailouts that have been granted to Greece, Ireland and lastly, Portugal is that they are to provide a means to ensure that these nations can meet their debt obligations and avoid a default on the repayment of any government bonds which fall due.
For a change, Russia, the former archenemy of capitalism and lynchpin of the former Soviet Union, has had to bail out a bank (nothing like wholeheartedly espousing the new capitalist system!).
.png "DailyForex logo")
Forex Trading Reviews & News 
