Dear Charlie,
I watched BBC this afternoon... Germany and Canada
are the only two nations left with an AAA currency
rating.
Who would have thought this possible 7 years ago!
Cheers
Euro falls versus dollar, Moody's downgrade hits
sterling
http://www.reuters.com/article/2013/02/22/us-
markets-forex-idUSBRE91514J20130222
By Wanfeng Zhou
NEW YORK | Fri Feb 22, 2013 6:07pm EST
(Reuters) - The euro hit a six-week low against the
dollar on Friday after the European Central Bank said
banks will repay less than half the expected amount of
loans, while a downgrade of Britain's government bond
rating pressured sterling.
The yen dropped against the dollar and euro, with
many investors forecasting further weakness as the
Bank of Japan looked set to ease monetary policy
further to fight deflation.
Banks will repay 61.1 billion euros ($80.8 billion) of
the second round of the ECB's three-year loans next
week, far below the 130 billion euros in repayments
expected by the market. The smaller amount
suggested many banks are still dependent on the ECB.
"The smaller than expected payback of loans means
the ECB's balance sheet will shrink at a slower than
expected pace," said Omer Esiner, chief market analyst
at Commonwealth Foreign Exchange in Washington. It
"further undermined confidence in the state of
recovery in the 17-member bloc."
The euro fell as low as $1.3144, its lowest since
January 10, retreating from a session high of $1.3244
after the German Ifo survey showed a big jump in
business morale in Germany, suggesting a brighter
outlook for the euro zone's largest economy.
It was last down slightly at $1.3183, with market
players reporting supporting bids around $1.3150-60.
Richard McGuire, senior fixed income strategist at
Rabobank, said that Italian banks may have held off
repaying the loan due to the uncertainty about the
result of the Italian election this weekend.
Analysts are divided over whether center-left leader
Pier Luigi Bersani will be able to form a stable majority
capable of pursuing the economic reforms that an
uncompetitive Italy needs to exit recession.
Investors were wary about the risk of a fragmented
Italian parliament or resurgence by former Prime
Minister Silvio Berlusconi, which could hinder the euro
zone's third largest economy from fighting its longest
recession in 20 years.
A report from the European Commission on Friday that
forecast the euro zone economy will contract again in
2013 also weighed on the euro, which fell for a third
straight session.
On the week, the euro fell 1.3 percent versus the
dollar, declining for the third straight week.
UK DOWNGRADE
Moody's Investors Service late Friday cut the United
Kingdom's credit rating to Aa1 from Aaa, citing
weakness in the nation's medium-term growth outlook
that it now expects to extend for a number of years.
The outlook on the credit is stable.
Sterling fell from $1.5247 to $1.5160 after Moody's
downgrade and was last at $1.5248, down slightly
from the previous day's close of $1.5253.
"It's a pretty big deal. We didn't see a huge reaction in
the pound because it's late in the New York session.
But you'll see some more aggressive selling when the
markets open on Sunday," said Kathy Lien, managing
director at BK Asset Management in New York. "So
many people were focused on the yen and the euro
that not everyone was already short sterling. So this
could compound the pain."
Against the yen, the euro rose 0.3 percent to 123.12
yen. The dollar rose 0.3 percent to 93.39 yen, not far
from a 33-month high of 94.47 hit last week, but was
on pace for a weekly loss of 0.3 percent.
Some market players said the fact U.S. policymakers
had not particularly objected to yen weakness, which
makes Japan's exports more competitive relative to
those of other countries, meant the downtrend could
continue.
"We didn't really realize how aggressive the Japanese
officials would get, and we also didn't really sense the
U.S. condoning it as much as they did," said John Vail,
chief global strategist at Nikko Asset Management.
"It could be that they are quite willing to let the yen get
to this level. My sense is that the 95-105 yen level is
the intended range."
The Australian dollar regained ground after hitting a
four-month low of $1.0221 against a broadly stronger
U.S. currency on Thursday. It was last up 0.8 percent at
$1.0325.
(Additional reporting by Gertrude Chavez-Dreyfuss
and Steven C. Johnson; Editing by Diane Craft and
Kenneth Barry)
I watched BBC this afternoon... Germany and Canada
are the only two nations left with an AAA currency
rating.
Who would have thought this possible 7 years ago!
Cheers
Euro falls versus dollar, Moody's downgrade hits
sterling
http://www.reuters.com/article/2013/02/22/us-
markets-forex-idUSBRE91514J20130222
By Wanfeng Zhou
NEW YORK | Fri Feb 22, 2013 6:07pm EST
(Reuters) - The euro hit a six-week low against the
dollar on Friday after the European Central Bank said
banks will repay less than half the expected amount of
loans, while a downgrade of Britain's government bond
rating pressured sterling.
The yen dropped against the dollar and euro, with
many investors forecasting further weakness as the
Bank of Japan looked set to ease monetary policy
further to fight deflation.
Banks will repay 61.1 billion euros ($80.8 billion) of
the second round of the ECB's three-year loans next
week, far below the 130 billion euros in repayments
expected by the market. The smaller amount
suggested many banks are still dependent on the ECB.
"The smaller than expected payback of loans means
the ECB's balance sheet will shrink at a slower than
expected pace," said Omer Esiner, chief market analyst
at Commonwealth Foreign Exchange in Washington. It
"further undermined confidence in the state of
recovery in the 17-member bloc."
The euro fell as low as $1.3144, its lowest since
January 10, retreating from a session high of $1.3244
after the German Ifo survey showed a big jump in
business morale in Germany, suggesting a brighter
outlook for the euro zone's largest economy.
It was last down slightly at $1.3183, with market
players reporting supporting bids around $1.3150-60.
Richard McGuire, senior fixed income strategist at
Rabobank, said that Italian banks may have held off
repaying the loan due to the uncertainty about the
result of the Italian election this weekend.
Analysts are divided over whether center-left leader
Pier Luigi Bersani will be able to form a stable majority
capable of pursuing the economic reforms that an
uncompetitive Italy needs to exit recession.
Investors were wary about the risk of a fragmented
Italian parliament or resurgence by former Prime
Minister Silvio Berlusconi, which could hinder the euro
zone's third largest economy from fighting its longest
recession in 20 years.
A report from the European Commission on Friday that
forecast the euro zone economy will contract again in
2013 also weighed on the euro, which fell for a third
straight session.
On the week, the euro fell 1.3 percent versus the
dollar, declining for the third straight week.
UK DOWNGRADE
Moody's Investors Service late Friday cut the United
Kingdom's credit rating to Aa1 from Aaa, citing
weakness in the nation's medium-term growth outlook
that it now expects to extend for a number of years.
The outlook on the credit is stable.
Sterling fell from $1.5247 to $1.5160 after Moody's
downgrade and was last at $1.5248, down slightly
from the previous day's close of $1.5253.
"It's a pretty big deal. We didn't see a huge reaction in
the pound because it's late in the New York session.
But you'll see some more aggressive selling when the
markets open on Sunday," said Kathy Lien, managing
director at BK Asset Management in New York. "So
many people were focused on the yen and the euro
that not everyone was already short sterling. So this
could compound the pain."
Against the yen, the euro rose 0.3 percent to 123.12
yen. The dollar rose 0.3 percent to 93.39 yen, not far
from a 33-month high of 94.47 hit last week, but was
on pace for a weekly loss of 0.3 percent.
Some market players said the fact U.S. policymakers
had not particularly objected to yen weakness, which
makes Japan's exports more competitive relative to
those of other countries, meant the downtrend could
continue.
"We didn't really realize how aggressive the Japanese
officials would get, and we also didn't really sense the
U.S. condoning it as much as they did," said John Vail,
chief global strategist at Nikko Asset Management.
"It could be that they are quite willing to let the yen get
to this level. My sense is that the 95-105 yen level is
the intended range."
The Australian dollar regained ground after hitting a
four-month low of $1.0221 against a broadly stronger
U.S. currency on Thursday. It was last up 0.8 percent at
$1.0325.
(Additional reporting by Gertrude Chavez-Dreyfuss
and Steven C. Johnson; Editing by Diane Craft and
Kenneth Barry)
Comment