Spain’s Credit Rating To Take Another Hit

Spain, which has already had its credit rating downgraded by two other major ratings agencies, has now been put on a three month review for a possible downgrade by Moody’s. This does not bode well for investor confidence in the Euro as banks are also due to repay one year funds of 442 billion Euros today.

Pound Sterling – UK Markets

The Pound has stalled after its recent run of gains losing out to the Euro and US Dollar overnight. This has been attributed to the feeling that the global recovery is slowing down and that Sterling is still seen as a slightly risky investment following some disappointing housing data yesterday and a report today outlining a decline in manufacturing. Unexpectedly however, the Bank of England has announced a drop in the second quarter in the rate at which mortgage holders and businesses default on loans. Although the Pound’s run of gains has stalled, the Sterling rate against the Euro is still strong for recent times at 1.2121 at 11.30 am this morning.

US Dollar – US Markets

The US Dollar gained on the Euro overnight but has begun dropping so far this morning. Today sees a lot of US data releases including initial jobless claims, construction spending, pending home and vehicle sales which together will help investors take a view on the overall state of the US recovery. Markets will be looking at the most significant piece of US data for the week tomorrow which will reveal the latest figures on unemployment.

Euro – European Markets

Moody’s rating agency are putting Spain’s credit rating on review due to its weak growth prospects as the nation prepares to sell 3.5 billion Euros of debt today. This follows the downgrading of Spain by Fitch Rating and Standard & Poor’s. This is disappointing news for the Euro which started to show some gains yesterday after the newly applied for three month loans from by European banks were less than expected. The 131.9 billion Euro total that is to be lent over the next three months is less than predicted indicating that the financial recovery may be happening quicker than expected. Banks today have to repay their one year loans of 442 billion Euros which was the largest amount ever awarded by the ECB.

Other Currencies – Highlights

The Canadian Dollar has continued its losing streak towards three year lows. New reports showing that GDP figures unexpectedly stalled in April have contributed to the ongoing slide. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.