By ForexMansion.com
The debt crisis on the periphery has been placed on the back burner and ignored by markets participants recently. Fitch cut the outlook for Spain before the weekend, noting that the financial sector may need another 38 billion Euros and the euro bulls where unfazed.
Earlier today Moody’s slashed Greece’s rating by three notches to B1 and retained a negative outlook, citing difficulty collecting revenues and implementation risk. The rating agency said that the risks of default or distressed exchange had increased since it last cut Greece’s rating near the middle of last year.
Moody’s noted that 20% of the B1 rated sovereigns and companies default within five years. The recent rally in the Euro was somewhat curtained, after touching 1.4030. Resistance above at 1.4250 is a likely target. Tomorrow the markets will focus on German January Factory orders released at (11:00 GMT).
On Wednesday, Portugal will be going to try to raise 0.75-1.0 Billion Euros in a new bond issuance, the first since the mid-Feb syndicated offering.
Reports indicate Germany has rejected Irish requests for lower rates on the aid package from the EU. Ireland’s request is not finding sympathy among several other members either. The new Irish cabinet is expected to announce as early as tomorrow.
Japan’s foreign minister Maehara resigned over the weekend over a funding scandal and this has negative implication for Japan’s fiscal position. Next fiscal year’s budget passed the lower house, which means it will become law, but the funding of it is being held up by a revolt within the DPJ and by the opposition in the upper house. Maehara had been tipped as a possible successor to Prime Minister Kan, but his resignation appears to weaken Kan’s hand.
The Yen tested the 82.00 level but and was able to bounce slightly. The 20-day moving average seems to be solid resistance.
Oil Price continued to rise as unrest in Libya remains in the headlines. Continued attacks on city’s in Libya that hold oil installations, are creating anxiety that the unrest could spread to other countries including Saudi Arabia, which would create a supply disruption that could not be met by other oil producers.
During the weekend there was a lot of chatter about the US releasing US petroleum reserves to temper the price of US crude. Historically, presidents have released Oil from this reserve in difficult situations to relieve the price of oil, and keep more oil on the markets.
