Credit rating agency Moody’s has downgraded the rating of Greece by a whopping 3 notches. Their official rating fell from Baa1 to Ba1. The outlook remained negative, meaning that Greece is likely to be hit again by Moody’s. EUR/USD is unaffected as the Middle East pushes sends the dollar down. Update.
The BBC reports about the reasons for the downgrade and the very angry response from the troubled country:
Moody’s cited “endemic tax evasionâ€, “very ambitious†austerity plans, and the possibility that the EU may force a debt restructuring on Greece after 2013 as reasons for its decision.
Greece’s finance ministry said the move was “incomprehensible†and called for tighter regulation of rating agencies.
EUR/USD isn’t affected by this downgrade. Greece already received a bailout package and is a relatively small country. The pair rose above 1.40 but couldn’t breach the tough 1.4030 line.
The real worries are from Ireland,where the new government is very serious about renegotiating the bailout plan, and hinting the current terms won’t work.
And even bigger worries come from Portugal, where a big load of debt awaits the Iberian nation in April, and time is running out. Portuguese 10 year bond rates are at 7.55% – very high. Ireland received a bailout when yields passed 7%. Portugal suffers from these high rates for quite some time.
Currently, EUR/USD is moving higher on US dollar weakness. The ongoing civil war in Libya doesn’t near an end, despite talks that Gaddafi might resign and leave.
Battles around important ports that export oil in Libya are joined by another Gaddafi might resign and leave. The huge oil-exporting nation was expected to feel the protests from Friday, March 11th, but they begin already now, and will last throughout the week. Protests are spreading from Shiite areas near the Persian Gulf to many other cities across the Arab peninsula.
Oil sees no peak. WTI is at $106.50 and Brent is on the rise as well. This is very negative for the US dollar.
For more technical levels and European events, see the EUR/USD forecast.
