Euro Nations Facing Downgrades

The Euro has slumped over the course of the last twenty four hours as several Euro nations have been in the headlines. Moody’s have put Spain on review for a possible credit downgrade and Standard and Poor’s have taken down the rating of Belgium. Furthermore, the Italian Prime Minister received only a very slim vote of confidence adding in some political as well economic vulnerability. This morning has seen the Pound take a knock following poor unemployment reports – speak to your broker for advice on the current volatility and don’t forget we are open on all non bank-holiday days over Christmas.

Pound Sterling – UK Markets

This morning has opened with some poor jobs figures from the UK causing a drop in the Pound so far this morning. This follows a day in which Sterling strengthened against the Euro as CPI inflation came in above target. This morning’s figures showed a rise in the ILO Unemployment Rate to 7.9 percent, a small drop in average earnings and a disappointing drop in jobless claims by only – 1.2 thousand rather than a predicted – 3.0 thousand. Sterling has suffered a steep drop from a three week high against the US Dollar which has benefited from strong internal economic data from the US and devaluing of the Euro.

US Dollar – US Markets

The US Dollar has strengthened against both Sterling and the Euro over the course of the last twenty-four hours as events in Europe weighed on the Euro and good retail figures came in along with the FOMC decision. Retail figures showed a monthly rise for November of 0.8 percent beating an expected rise of 0.6 percent. The FOMC have decided to continue with the bond purchasing programme agreed at the last meeting without any changes not meeting some of the rumours that quantitative easing would be increased again already. This therefore removed some of the recent uncertainty weighing on the Dollar and helped shape more positive sentiment despite comments that progress towards normal growth and employment levels ‘had been disappointingly slow’. Inflation data will be released this afternoon.

Euro – European Markets

The Euro has weakened following several new developments in the Euro-zone including rating reviews of Spain and Belgium as well as political events in Italy. The Euro has responded this morning to the poor UK data by starting to pick up against Sterling. Standard and Poor’s downgraded Belgium to a negative outlook and another ratings agency Moody’s have put Spain’s A1 rating on review for a possible downgrade. This has damaged sentiment particularly as Spain has recently been under much scrutiny from international markets after being speculated to be one of the next nations after Ireland to require rescue funds despite Spain’s claims to the contrary. The very narrow vote of confidence for Italian Prime Minister Silvio Berlusconi yesterday did also not help the Euro.

Other Currencies – Highlights

The Canadian Dollar fluctuated as the US decision was taken to maintain the US stimulus plan with commodities such as crude oil which affect the value of the Canadian Dollar swinging between losses and gains. The Canadian Dollar fell against six of its major counterparts as Bank of Canada Governor said that it’s persistent strength posed a risk to recovery. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.