Any temporary EUR bulls looking for further EUR retracement were given a jolt late on Friday as S&P waged an assault on Euro-zone credit ratings with downgrades to 16 Euro-zone countries, France among them, while affirming Germany’s AAA rating. Cyprus, Italy, Portugal, and Spain were slashed by two notches, long-term ratings on Austria, France, Malta, Slovakia, and Slovenia, by one notch while long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands were left unchanged. Rumours of the downgrade had been circulating during the European afternoon with the EUR already sliding from its 1-week high and the announcement catapulted the single currency to fresh 2012 lows. Thin markets ahead of the US long weekend did not help matters.
US data had also fostered a risk-off sentiment with the US trade gap widening to $47.8 bln in November from a revised $43.3 bln though Michigan confidence did improve to a 7-month high of 74.0 from 69.9 last. Wall St entered the long weekend on a gloomy note with JP Morgan’s earnings miss adding to the gloom from Europe’s downgrades. The DJIA closed down 0.39%, S&P down 0.49% and the Nasdaq down 0.51%.
Today’s Asian data releases focus on Japan’s machine orders, corporate goods prices and consumer confidence. UK Rightmove house prices also feature along with Australia’s lending data for house purchase in investment. ANZ job advertisements for December complete the picture. Europe sees German wholesale prices, Swiss producer and import prices together with Norway’s trade balance. US markets are closed for Martin Luther King Day so no events are scheduled.
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