Moody’s downgrades Europe as Greek rescue package remains unclear

<p>Moody’s downgrades Europe as Greek rescue package remains unclear. Moody’s has downgraded Italy, Malta, Portugal, Slovakia, Slovenia, and Spain. The rating’s agency also issued negative […]</p>

Moody’s downgrades Europe as Greek rescue package remains unclear. Moody’s has downgraded Italy, Malta, Portugal, Slovakia, Slovenia, and Spain. The rating’s agency also issued negative outlooks for Austria, France, and the UK, which are all ‘still’ keeping the Aaa rating.
Range: 1.0664 – 1.0723
Support: 1.0665
Resistance: 1.0720

Aussie-dollar opened at 1.0735 and after a brief high of 1.0739, fell back sharply with the euro-dollar following the Moody’s ratings announcement and comments from ECB’s Nowotny over Greece’s ability to meet its austerity obligations. Aussie fell down on sales from Asian names through stops at 1.0720 and the move was further compounded by a selection of other Aussie cross sales, which then triggered further stops sales through 1.0680 to lows of 1.0667. The BoJ announcement of further QE helped shore up the Aussie with a bounce to 1.0695 as Aussie-yen demand emerged. Bids are seen from 1.0665 down to 1.0650 with stops below. Offers start from 1.0720 up to 1.0750 with stops above.

Range: 1.3128 – 1.3175
Support: 1.3140
Resistance: 1.3194

Euro-dollar opened at 1.3185 after being ground down in New York on downgrade announcements from Fitch and S&P of Spanish banks, and dwindling optimism over Greece as ECB warned that more had to be done if Greece was to meet its austerity measures. The Eurogroup is also now set to decide on the Greek package as a whole including the PSI. Asia opened to further rating news from Moody’s that nine European sovereigns would be adjusted, including France, Austria and the UK whose ratings were put on a ‘negative’ outlook. Downgrades were applied to Spain, Portugal, Italy, Slovakia, Slovenia and Malta. Euro fell through stops at 1.3180 and 1.3150 – the move stalled eventually at 1.3145 after meeting some strong demand and recovered to 1.3175 but remains under pressure. Key support is now seen towards 1.3140 with a break there pointing down to 1.3025.

Range: 1.5687 – 1.5735
Support: 1.5686
Resistance: 1.5755

Cable opened at 1.5768 in Asia after being under pressure for the whole New York session on fading risk appetite as doubts build over Greece’s ability to implement its austerity measures. The Asia session opened to further rating news with Moody’s downgrading the ratings of six European sovereigns and putting UK, France and Austria on a ‘negative’ outlook. The move prompted a selloff in euro-dollar and cable, and the pound fell from early highs of 1.5771 to 1.5702 before a weak bounce to 1.5721. Cable remains under pressure late into the Asian session. Resistance looks at 1.5755 and then 1.5797. Support now at 1.5686 and 1.5644. Euro-sterling picked up from early lows of 0.8360 after opening at 0.8364 and edged up to 0.8381, compounding the cable fall.


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