Moody’s Investors Services has placed eight Spanish banks on review for a possible downgrade
City Index December 13, 2011 1:00 PM
<p>Moody’s Investors Services has placed eight Spanish banks on review for a possible downgrade, citing added pleasure from economic weakness and risk from a struggling […]</p>
Moody’s Investors Services has placed eight Spanish banks on review for a possible downgrade, citing added pleasure from economic weakness and risk from a struggling commercial real-estate market.
Cable closed in New York at 1.5585 after pulling back from New York highs of 1.5657, with euro-sterling slippage through the session helping to offset pressure from the deeper move in euro-dollar. The cross traded to a low of 0.8452 Monday, with trade through Asia consolidating this move within a range of 0.8449-0.8462. Cable initially eased to challenge New York lows of 1.5575 in early Asia, with the rate recovering through most of the session to 1.5619. The rate saw a pullback to the 1.5600-1.5595 area ahead of the European open, recovering to extend highs to 1.5622 in early Europe, and holding firm. Resistance is seen at 1.5626 ahead of 1.5638. Support remains at 1.5575, with interest extending to 1.5565, a break to open a deeper move towards 1.5537.
The initial reaction from the ECOFON meeting overnight saw a brief rally in the euro, with Chairman Jean-Claude Junker saying that ministers had agreed to explore avenues to increase the firepower of the IMF and that they will look for ways to leverage the EFSF further. However, this could be more kicking of the can along the street as many times before the market has heard EU officials say they plan to make a plan. Price action will be dominated today by further EU headlines and cross references and the month-end flows. However, without any concrete plan form the EU, any rally could be short lived, with some traders targeting a potential re-test of last week’s lows of 1.3210 and October’s low of 1.3145.
Gold prices headed sharply lower again yesterday as lack of confidence following last week’s EU summit and talk overnight of a possible Moody’s downgrade of eight Spanish banks weighed on the euro and boosted the dollar again. Stocks are also coming under pressure again after sharp falls yesterday amid a general risk-off sentiment in the marketplace, with the metal now trading more as a risk asset as opposed to a safe haven venue. Gold opened the new week at 1,711.30 and promptly fell to 1,681.75 in early Europe. The move accelerated as New York opened, with a drop to 1,657.40 before clawing back a few dollars into the close at 1,666.50. Asian markets have led another fall to 1,651.30. Today’s support is at 1,644 and 1,619.30, with resistance drawn down to 1,700 and 1,724.15.