EU Morning Report - S&P downgraded Spain

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By NikolasX | October 11, 2012 6:56 PM EST

Easy Forex

The euro (EUR) is weakening against most of its major counterparts, following the downgrade of Spain’s sovereign rating by the S&P. The rating agency slashed the troubled nation’s credit rating by two notches to BBB minus, one notch above non-investment (junk) grade. The worsening economic conditions, rising unemployment and the uncertainty regarding the government’s intentions for an official bailout request were the key reasons behind this move.

§ The Australian dollar (AUD) is strengthening across the board, even as the unemployment rate increased unexpectedly to 5.4% from 5.1%. Given the softening labor market and recent rhetoric by the Reserve Bank of Australia (RBA) there is heightened speculation among market participants that the central bank will proceed with another rate cut in November.

§ Oil had a volatile day, recoding a high at 93.64 following rising tensions in Syria and then plummeting to 91.02 dollars a barrel. The situation in Middle East, that now includes Turkey’s aggressive stance, is extremely fragile. Investors are trying to gauge the effect this will have on the supply of Oil, in the same time, they are trying to estimate the effect on demand coming from the worsening economy worldwide.

Stay in tune throughout the day with foreign exchange bullets!

. Pivot Preference1 Sentiment2
. EURUSD 1.2890 LONG @ 1.2890 48% of deals buy EUR
. USDJPY 78.35 LONG @ 78.35 91% of deals buy USD
. GBPUSD 1.6050 LONG @ 1.6050 45% of deals buy GBP
. AUDUSD 1.0220 LONG @ 1.0220 58% of deals buy AUD
. GOLD 1768
LONG @ 1768
57% of deals buy GOLD
. OIL 92.90 SHORT @ 92.90 63% of deals buy OIL
1 data generated by Trading Central, 2 data obtained from easy-forex Inside Viewer
Currency Time (GMT) Event Forecast
. CAD 12:30 Trade Balance in August
-1.8 bil
. USD 12:30 Initial Claims over the past week
370 k
. OIL 15:00 Crude Oil Inventories
1.3 mil
Movers Shakers
The US dollar (USD) has not strengthened further versus the Swedish krona (SEK) but kept whipsawing above the new support area around 6.6900. This consolidation provides an opportunity for a great trade in terms of risk and reward. The trend is bullish and a long position with a tight stop loss could do that.


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