Fitch Slaps Spain to BBB

<p>Fitch Slaps Spain to BBB. Fitch Ratings downgraded the long-term debt of Spain by 3 notches to BBB from A, with negative outlook, reporting Spain […]</p>

Fitch Slaps Spain to BBB. Fitch Ratings downgraded the long-term debt of Spain by 3 notches to BBB from A, with negative outlook, reporting Spain is forecast to remain in recession throughout 2012 and 2013, against a mild recovery in 2013 previously estimated. Fitch believes Spain’s high level of foreign indebtedness “has rendered it especially vulnerable to contagion from the ongoing crisis in Greece.”

Range: 1.2481 – 1.2571
Support: 1.2544
Resistance: 1.2577

Euro-dollar closed in NY at 1.2559, off a late pullback low of 1.2555 seen after Fed’s Bernanke disappointed markets by failing to hint at imminent QE3. The rate had seen a strong rally with risk-on rally also fuelled by the China rate cut. The rate extended its recovery to 1.2575 into early Asia as markets adjusted positions on expectation that the China cut would boost Asian equities. However, Tokyo took a different view of the cut, the move prompting suggestions that the move was pre-empting weak Chinese data, due for release this weekend. Equities moved sharply lower, Aussie taking the lead in currencies on the risk-off move, taking euro-dollar lower with it. The rate touched a session low at 1.2514. Former Greek PM Papademos warning that a Greek exit would push Greece toward a ‘vortex of self-destruction’. The rate recovered to 1.2533 before settling between 1.2517-1.2533 into early Europe.

Range: 1.5449 – 1.5524
Support: 1.5452
Resistance: 1.5517

Cable closed in NY at 1.5530, off sessions best recovery level of 1.5601. The rate had initially been driven higher by the no change decision by the BoE MPC for rates and QE, with risk also given a boost as China cut rates into the BoE announcement. The market was also seen positioning on hope that the Fed’s Bernanke would hint at QE3 during NY morning testimony. However, although noting the tools at the Fed’s disposal to counter any adverse events Bernanke did not provide the awaited signal which prompted long covering. Cable recovered in early Asia to 1.5536 before turning lower, Asian equities were sold off sharply, adding further to the reversal from risk-on to risk-off which took cable to lows of 1.5484 through the Asian session. Support now 1.5452 and next line resistance 1.5517.
Range: 0.9836 – 0.9910
Support: 0.9853
Resistance: 0.9930

Aussie closing NY at session lows of 0.9993. The rate recovered to 0.9918 into early local trade as markets adjusted positions on expectation that Asian equities would gain on the China move. However, Tokyo viewed the move as a possible warning that China data, to be released at the weekend, could be weak with Asian equities sold sharply lower. Strong sales of Aussie-dollar and Aussie-yen provided the lead in the change to risk-off, triggered stops through 0.9875 took rate to lows of 0.9838. The rate managed to recover to 0.9878 ahead of the European open, finding some buoyancy above 98.50. Gold was also seen a driver in the early move lower in Aussie, stops triggered below 1,585.00 took price to 1,559.00 1,555.00 seen critical. End of week paring of risk expected to leave Aussie soggy ahead of China data.

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