North Koreas Kim Jong-il dies, Ratings agencies overhang remains a threat, Eurogroup set to discuss IMF bilateral loans and other fiscal compact measures, US Republicans set to vote on payroll tax cut bill. European markets to open in the red after Asia selloff, with EURUSD struggling to hold $1.30.
The overnight of death of North Koreas leader Kim Jong-il has added an additional element for markets to think about with uncertainty over who has control in this secretive authoritarian regime.Markets were always likely to remain cautious this week even without the overnight news, as they absorbed the latest downgrades and warnings from the ratings agencies at the end of last week. With markets likely to remain thin markets are still awaiting Standard and Poors final assessment of the EU summit 10 days ago with the fear that France could well lose its triple A rating, and with the EFSF lose its rating as well.
Moodys decision to downgrade Belgium two notches wasnt too much of a surprise given their exposure to Dexia and their latest growth figures showing contraction, and their yields could well come under pressure again this week.
Fitch also got in on the act, but decided to just cock the trigger on Friday and not actually pull it, by putting six European countries on negative watch with a view to a downgrade, including France, Italy and Spain. Their assessment that a comprehensive fix to euro crisis is probably beyond reach showed that a downgrade is probably only a matter of time.
By
The overnight of death of North Koreas leader Kim Jong-il has added an additional element for markets to think about with uncertainty over who has control in this secretive authoritarian regime.Markets were always likely to remain cautious this week even without the overnight news, as they absorbed the latest downgrades and warnings from the ratings agencies at the end of last week. With markets likely to remain thin markets are still awaiting Standard and Poors final assessment of the EU summit 10 days ago with the fear that France could well lose its triple A rating, and with the EFSF lose its rating as well.
Moodys decision to downgrade Belgium two notches wasnt too much of a surprise given their exposure to Dexia and their latest growth figures showing contraction, and their yields could well come under pressure again this week.
Fitch also got in on the act, but decided to just cock the trigger on Friday and not actually pull it, by putting six European countries on negative watch with a view to a downgrade, including France, Italy and Spain. Their assessment that a comprehensive fix to euro crisis is probably beyond reach showed that a downgrade is probably only a matter of time.
By
M.Zohaib Gadit
Forex Trading Consultant
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