Euro Up on Spain Reprieve from Moody’s

The Euro earlier struck a 1-month peak against the U.S. Dollar following Moody’s affirmation of Spain’s credit rating, instead of the downgrade into junk status that had been expected. That helped to lift sentiment as it eliminated the most immediate risk of higher borrowing costs ahead of Spain’s bond auctions tomorrow. As reported at 12:50 p.m. (JST) in Tokyo, the EUR/USD pair was trading 0.3% higher at $1.3091, retreating from $1.3125, the highest level for the pair in nearly a month. Traders say they will remain wary in the short term, however, as there is no reason for any great optimism.

Even with the European summit of finance ministers and leaders just ahead, expectations are low and most believe that yet again very little of value will be forthcoming. The real hope is that Spain will ask for formal aid while at the summit but most analysts agree that that is unlikely.

The Euro also rose higher against the Japanese Yen, with the EUR/JPY pair touching on a 1-month high yesterday, when it struck 103.51 Yen; the pair is currently trading at 102.99. The Yen continues to be soft as speculation of an intervention by the Bank of Japan resurfaces.