Archive for October, 2012

All eyes will be on the Eurozone this week as a welter of news upturns expectations in the run up to Thursday’s EU Summit in Brussels. Spain in particular is breathing a little easier today, following Moody’s decision not to downgrade its credit rating to ‘junk’ status.

The country’s debt remains in the investment grade, though by the slimmest of margins. Moody’s reaffirmed their Baa3 rating with a negative outlook, citing progress on economic reforms and bank restructuring domestically, and continued ECB bond-buying for the Euro periphery.
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The Spanish Government is facing hard decisions in light of today’s action by credit agency Standard & Poor to cut the country’s rating. As the Spanish crisis deepens online forex traders need to evaluate Spain’s future in the Euro Zone.

For Spain’s politicians the hardest question is whether to ask for financial assistance to lower its borrowing costs. Applying for sovereign aid is perceived as an act of financial desperation and in recent months the Spanish Government has been keen to refute rumours that it was seeking such support. However in its report S&P linked the Spanish government’s unwillingness to seek aid with its decision to cut the country’s rating.
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As Greece slips into an ever deepening recession with unrest and protests reported across the country, the fate of the Europ hangs by a thread. With increasing risk of a Greek default, the Euro may slip against the dollar from its current high of 1.298/dollar.

Euro against dollar

After a brief rally that surged the Euro to 1.298 against the dollar, the looming threat of an European recession spurred by failing austerity measures in Greece and Spain has once again triggered a downward spiral of the Euro against the dollar. The coming few weeks will be crucial for forex traders are (more…)