Euro Pressured by Moody’s Downgrade

By: Barbara Zigah

The Euro had initially made some gains against the U.S. Dollar during the Monday trading session on news that the Greek parliament had approved additional austerity measures, but recent news that Moody’s credit rating agency had downgraded several Eurozone members put renewed albeit slight pressure on the common currency. As reported at 2:21 p.m. (JST) in Tokyo, the EUR/USD pair is trading at $1.3165, nearly mid-point of the day’s tight trading range of 1.3149 and 1.3176. Among others, Moody’s downgraded Portugal, Spain and Italy and also warned that the AAA-rated U.K. and Austria could also see a ratings cut given that economy is closely tied to the fates of the Eurozone.

Elsewhere, bowing to political pressure, in a surprise move the Bank of Japan intervened in the too strong Yen by easing monetary policy. The central bank announced that it would increase its asset purchase program to 65 trillion Yen, equivalent to $130 billion. Immediately following the news, the Japanese Yen fell 0.5% against the U.S. Dollar to trade at 77.96 Yen, the highest price in almost three weeks. More recently, the USD/JPY was trading at 77.70, off the day’s low of 77.55. The Bank has also indicated that they would continue to intervene in the currency market if the Yen continues to appreciate and hamper their restoration efforts.