S&P downgrade could force Spain into aid request

<p>The US ratings agency S&P cut Spain’s rating by two notches to BBB-  (just one notch above ‘junk’ status), with the outlook remaining negative. The […]</p>

The US ratings agency S&P cut Spain’s rating by two notches to BBB-  (just one notch above ‘junk’ status), with the outlook remaining negative. The timing of the announcement came as the US session finished and with market liquidity at a premium the single currency dived 50 points but held the 200-day moving average at  1.2822.

The risk from here is that the downgrade adds pressure to Spanish yields thus forcing Spain to ask for aid. Spain will today launch a private placement of 2015/2016/2017 bonds, ending Wednesday, October 17. The placement, totalling €4.86bn, will finance part of the country’s regional liquidity fund. After the rating downgrade, this will be keenly watched.

The Australian jobs report has been taken as a strong positive with the headline number showing a strong gain of 14.5k against the 5k predicted.  Full time employment outperformed to 32.1k, whilst part-time employment was weaker at -17.7k.  The unemployment rate is higher than expected but that seems to be because the participation rate has gone up from 65% to 65.2%.  Overall this is a very good set of numbers.

 


EUR/USD

Supports 1.2820-1.2755-1.2680 | Resistance 1.2880-1.2910-1.2935


USD/JPY

Supports 77.80-77.40-77.05 | Resistance 78.25-78.50-78.80


GBP/USD

Supports 1.5985-1.5960-1.5910Resistance 1.6030-1.6070-1.6120

 

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