Moody’s Downgrades Irish Debt, Euro Pressured

By: Barbara Zigah

The common currency Euro slipped against the U.S. Dollar in London trading today as Moody’s, the credit rating agency, downgraded Irish debt from AA2 to BAA1. This followed a similar move by Fitch last week, and so came without too much surprise to investors. As reported at 8:58 a.m. (GTM) in London, the Euro was trading against the greenback at $1.3300, off from the day’s high trade of $1.3326 and still up slightly in the day’s trading.

At this week’s E.U. summit, leaders there agreed to make some minor changes to the E.U. Treaty to become effective in mid-2013, and which will effectively establish a permanent mechanism to address debt problems that have plagued the Eurozone for some time now.

The hope is that a draft statement will be issued by the E.U. membership which will indicate the members’ readiness and assurance that adequate funds will be made available to the Eurozone rescue fund.

However, that statement is not a done deal, as the leadership still appears to be divided on some key issues. One strategist commented that the E.U. policymakers have a lot of work left to be done, and the Euro will continue to be under pressure, especially if improved economic data keeps coming in from the U.S.