The euro has suffered a setback in the last 24 hours, as ratings agency Moody’s announced a fresh wave of credit downgrades to European sovereigns. Six countries including Italy, Spain and Portugal had their rating cut; and a number of other major countries (France, the UK and Austria) were put on negative watch. Of those countries put on negative watch, the UK is the most notable as it is not a Eurozone member, and thus far, its triple-A rating has been shielded from the turmoil in mainland Europe. This may be an early sign that the credit crisis is spreading and agencies like Moody’s, S&P and Fitch may be about to turn their sights on some of the weaker non-Eurozone nations. In response to the changes, FX markets have witness a renewed demand for safe-haven dollars, with EURUSD falling to 1.3128 and GBPUSD also dropping to 1.5686.
In other news, the BoJ surprised many by introducing an inflation target of 1% YoY, in a similar vein to the Fed’s recent decision. What is more, the Japanese central bank increased its asset purchase target in order to meet the newly introduced inflation target. Going into today’s monetary policy meeting there were no expectations for further easing, so the launch of a fresh JPY10trn in JGB purchases (double the size of both the previous increases to the asset purchase facility) has weakened the currency, sending USDJPY above 78.00 levels for the first time in around 3 weeks.
Coming up in today’s session, we will get the latest UK CPI figures for January; where it is expected that headline inflation will fall -0.5% MoM to 3.6% YoY – significantly down from December’s reading of +0.4% MoM, 4.2% YoY. We can also look forward to Eurozone industrial production, ZEW sentiment surveys, and US advance retail sales.
By
M.Zohaib Gadit
Forex Trading Consultant
In other news, the BoJ surprised many by introducing an inflation target of 1% YoY, in a similar vein to the Fed’s recent decision. What is more, the Japanese central bank increased its asset purchase target in order to meet the newly introduced inflation target. Going into today’s monetary policy meeting there were no expectations for further easing, so the launch of a fresh JPY10trn in JGB purchases (double the size of both the previous increases to the asset purchase facility) has weakened the currency, sending USDJPY above 78.00 levels for the first time in around 3 weeks.
Coming up in today’s session, we will get the latest UK CPI figures for January; where it is expected that headline inflation will fall -0.5% MoM to 3.6% YoY – significantly down from December’s reading of +0.4% MoM, 4.2% YoY. We can also look forward to Eurozone industrial production, ZEW sentiment surveys, and US advance retail sales.
By
M.Zohaib Gadit
Forex Trading Consultant
No comments:
Post a Comment
Feel free to comment.