Forex News | Currency News by Forexlive

WASHINGTON (MNI) – The following is the text of a statement Tuesday
by Standard & Poor’s regarding Portugal’s sovereign ratings:

Standard & Poor’s Ratings Services today said it placed its ‘A-’
long-term and ‘A-2′ short-term foreign and local currency sovereign
credit ratings on the Republic of Portugal on CreditWatch with negative
implications. The transfer and convertibility assessment remains ‘AAA’.

“The CreditWatch placement reflects our view of increased risks to
the government’s creditworthiness,” said Standard & Poor’s credit
analyst Frank Gill. “These risks stem from uncertainty about the
government’s possible recourse to official funding and the consequences
that obtaining such funding could have for the position of
private-sector creditors vis–vis official creditors after 2013.”

In 2011, Portugal’s minority government is set to implement an
ambitious fiscal austerity program with an emphasis on reducing
expenditures. However, we see the government as having made little
progress on any growth-enhancing reforms to offset the fiscal drag from
these scheduled 2011 budgetary cuts. In particular, we believe that
policies the government has pursued have done little to boost labor
flexibility and productivity. As a consequence of the Portuguese
economy’s structural rigidities and the volatile external conditions, we
project that the economy will contract by at least 2% in 2011 in real
terms.

The downward revision to our growth projection also reflects the
fact that Portugal has not reduced its large external current account
deficit during 2010.

In addition to what we view as the economy’s weak growth prospects,
the large stock of Portuguese debt that non-residents hold (54% of GDP)
has increased the government’s vulnerability to rising real interest
rates. This contributes to the country’s large gross external financing
needs and, we believe, raises the likelihood that Portugal will seek
external assistance from the EU.

What Portugal does to combat downward pressures on growth and under
what terms it accepts external support–if it does at all–will
influence the government’s creditworthiness. The Eurogroup Ministers
recently proposed treaty changes to establish a permanent crisis
mechanism to be called the European Stability Mechanism (ESM), which
will be based on the European Financial Stability Facility.

It is our understanding that the ESM may be designed to rank ahead
of private creditors in any future debt restructurings beginning in
2013. As a result, debt that European Monetary Union member states issue
might not rank pari passu with debt that the ESM issues. We think that
this treaty change would represent a move away from the original design
of the European Financial Stability Facility, which was intentionally
exempt from preferred creditor status by the 16 members of the Euro Area
in an effort to assist European Monetary Union members in financial
difficulties.

We expect to resolve the CreditWatch within the next three months.
“If Portugal does seek an external support program and if we believe
private creditors will be subordinated to public creditors, or if
Portugal’s fiscal or growth prospects weaken further, we could lower the
long- and short-term ratings,” said Mr. Gill. “Even if we were to
downgrade Portugal, we would currently expect the ratings to remain in
the investment-grade category.”

“If Portugal does not seek an external support program because of
better-than-anticipated fiscal performance or the passage of
growth-enhancing reforms, we would view the likelihood of it needing
external official support as reduced,” said Mr. Gill. “As a result, we
could affirm the ratings at ‘A-/A-2′.”

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MR$$$$,M$X$$$,MGX$$$,MFX$$$,M$$FI$]

–Senate Majority Leader Says Middle Class Tax Cuts Are Top Goal
–Sen. Reid: ‘Extremely Important’ To Vote On Middle Class Tax Cuts
–Sen. Reid: Appoints Senate Finance Chief Baucus To Tax Cut Talks
–Sen. Durbin: ‘Essential’ That UI Extension Be Part of Any Tax Deal

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid said Tuesday
that he hopes the tax cut negotiations between Congress and the White
House “come up with a bipartisan proposal,” but then added that he still
wants the Senate to vote on a middle class tax cut plan.

In comments after a Senate Democratic party luncheon, Reid said
“the number one priority” of Democrats is to “protect the middle class.”

Reid said Senate Democrats believe it is “extremely important” to
hold a vote on a plan to extend the Bush era tax cuts for those
individuals making $200,000 or less and couples making $250,000 or less.

Reid declined to discuss the procedural roadmap ahead regarding tax
cut extension votes.

Reid said Senate Finance Committee Chairman Max Baucus would
represent Senate Democrats in the tax cuts talks.

Four congressional representatives — a House Democrat and a House
Republican and a Senate Democrat and a Senate Republican — will
negotiate the tax cut issue with Treasury Secretary Timothy Geithner and
White House budget director Jack Lew.

House Republican leader John Boehner has appointed Rep. David Camp,
the incoming chairman of the House Ways and Means Committee, to
represent House Republicans. Senate Republican leader Mitch McConnell
has appointed Senate Minority Whip Jon Kyl to represent Senate
Republicans in the talks.

Speaking moments before Reid, Senate Majority Whip Dick Durbin said
that he “assumed” there would be no Senate votes on tax plans while the
talks on the Bush tax cuts continue.

Durbin also said it was “absolutely essential” that an extension of
unemployment insurance be part of any tax cut agreement.

House Democratic leaders had been preparing to hold a vote later
this week on a bill to extend the Bush era tax cuts only for those
individuals making $200,000 or less and couples making $250,000 or less.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

A new round of stricter stress tests may be conducted in Europe but the results may not be disclosed, the Journal reports.

Hell of a lot of good that would do…

The JPY crosses took another hit overnight and the crucial JPY index must be getting close to the 120.20 level where the BOJ last intervened. USD/Asia has risen sharply over the last few sessions yet USD/JPY hasn’t followed and it would be no surprise to see the BOJ come in and give it some support.

By Kasra Kangarloo

WASHINGTON (MNI) – The U.S. manufacturing sector continued its
modest rate of in November, with Wednesday’s report by the Institute of
Supply Managers expected to show a slight decline in activity.

According to a survey of economists by Market News International,
the headline index will fall from 56.9 to 56.7, which would still
indicate an overall expansion in activity. An index reading above 50
indicates expanding activity, while an index below 50 indicates
contraction.

The five regional reports on manufacturing activity already
released for November suggest a mixed reading for the sector.

The survey conducted by the Philadelphia Federal Reserve showed an
unexpected jump in manufacturing activity, with the index moving to 22.5
from 1.0 in October. Surveys conducted by the Federal Reserve Banks of
Richmond and Dallas also showed improvement.

The survey conducted by the New York Federal Reserve, by contrast,
showed an index of -11.14, plunging from 14 in October. The drop was led
by heavy losses in the new orders and shipments indexes, an indication
of waning demand.

According to Sean Incremona, economist at 4Cast Ltd., though
month-to-month ISM data has been volatile, the trend has tilted
gradually upward. “The regional manufacturing surveys were mixed, which
goes in line with month-to-month volatility,” he said in a telephone
interview.

Improvement in the manufacturing sector has slowed in the last
year, as the headline ISM figure has mostly remained between 50 and 60,
a relatively modest range, since August 2009.

The sectors sluggish recovery reflects the trend in the broader
economy. The unemployment rate has been above 9.0% since May, 2009, and
the housing market has struggled to regain lost demand.

– Kasra Kangarloo is a reporter for Need to Know News in Washington

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MAUDS$,M$U$$$]

S&P has put Portugal on Credit Watch Negative, saying they may but the A- rating.

S&P says the creditwatch will be resolved within the next three months. The reason for placing of Portugal on creditwatch reflects possible recourse of official funding (i.e. an EU/IMF bailout).

A sovereign downgrade may negatively impact the rating s of five big Portuguese banks, the agency says.

S&P expects Portugal to remain investment grade even if downgraded.

S&P said last week, yesterday (I can’t remember, it’s all a blur) that two-thirds of warnings result in downgrades….

EUR/USD is slumping again, now at 1.2990.

The plan will be formally presented tomorrow and a vote of the commission will place on Friday.

14 of the 18 members of the commission must vote to approve the plan.

If the plan is approved, it will put political pressure on all sides to adopt the major provisions on the plan.

By Kevin Kastner

WASHINGTON, November 30 (MNI) – Consumer confidence rose solidly in
November to its highest level since June, with gains in both the current
conditions and future expectations readings. The assessment of employment
conditions was slightly better than in October, but was still very
bleak. Buying plans were up for autos, but down for homes and
appliances.

The regional manufacturing data were mixed in November, though
generally stronger with the glaring exception of the Empire State
survey. The national ISM data are scheduled for release this week.

The level of initial jobless claims fell sharply in the November 20
week, as seasonal adjustment factors expected a larger unadjusted
increase in the post-holiday week. The Labor Department noted that
claims have returned to their slight downward trend after leveling out
in recent months.

The Michigan Sentiment index was revised up to 71.6 in November,
with both the current conditions and expectations readings adjusted
higher.

The value of durables goods new orders fell more than expected in
October. While a reversal in transportation orders was expected given
the huge September increase, declines in other major category were a
surprise given other October manufacturing data that pointed to a modest
improvement. The business activity data released so far in November have
been mixed, with the Philadelphia Fed index pointing to solid expansion,
in contrast to the contraction suggested by the Empire State index.
Other regional data will be released in the coming weeks.

The pace of both new and existing home sales slowed in October,
while the supply for sale down for all homes. Housing starts fell for a
second straight month in October, with other home construction data also
pointing to sluggish home building.

–
Conference Board Consumer Confidence for November (index)
Tuesday, November 30 at 10:00 a.m. ET Actual:
Median Range Responses Nov10 Oct10 Sep10
Confidence 52.0 51.0 to 60.0 8 54.1 49.9 48.6

Comments: The index of consumer confidence rose sharply in
November, with gains in both the present situation and expectations
readings. The reading of jobs plentiful rose, but so did the reading of
jobs hard to get. The ratio between the two was slightly smaller than in
October and a year ago, but was still very large. Buying plans were up
for autos, but down for both homes and major appliances.

–
Chicago Purchasers Index for November (index)
Tuesday, November 30 at 9:45 a.m. ET Actual:
Median Range Responses Nov10 Oct10 Sep10
Chicago PMI 60.0 58.0 to 62.1 9 62.5 60.6 60.4

Comments: The Chicago PMI rose to a reading of 62.5 in November,
though the components were mixed. The production, new orders, and
employment readings were up, but there were declines in the readings for
supplier deliveries and inventories. In general, the data point to solid
expansion for the regional manufacturing sector in the month.

–
New Home Sales for October (annual rate)
Wednesday, November 24 at 10:00 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
New Homes 310k 300k to 335k 20 283k 308k 275k

Comments: October new home sales fell 8.1% to a 283,000 SAAR, well
below the 310,000 rate expected and following mixed revisions to the
previous two months. Sales were down sharply in the Northeast, Midwest,
and West regions, but up 3.1% in the large South region. The supply of
new homes for sale fell 0.5% to 202,000, the lowest since June 1968. As
a result of the large sales drop, however, the months supply rebounded
to 8.6 months at the current sales pace from 7.9 months in September.
The median sales price fell 13.9% to $194,900 in October, the lowest
since October 2003.

–
Reuters/University of Michigan Survey for November (final)
Wednesday, November 24 at 9:55 a.m. ET Actual:
Median Range Responses Nov10f Nov10p Oct10
Consumer Sent 69.5 69.0 to 71.0 16 71.6 69.3 67.7

Comments: The Michigan Sentiment index was revised up to a reading
of 71.6 in November from the 69.3 preliminary reading. There were sharp
upward revision to both the current conditions and expectations
readings. The index remained above the 67.7 reading for October.

–
Durable Goods Orders for October (percent change)
Wednesday, November 24 at 8:30 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
New Orders -0.1% -2.7% to +3.0% 20 -3.3% +5.0% -0.8%

Comments: Durable goods orders fell 3.3% in October, with an
expected pullback in transportation orders supplemented by declines in
every major new orders category. Still, the October decline did not
quite erase the entire September gain. Durables shipments fell 0.9% in
October, with declines in nondefense capital goods both including and
excluding aircraft orders. Both unfilled orders and inventories were up
in the month.

–
Personal Income for October (percent change)
Wednesday, November 24 at 8:30 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
Income +0.4% +0.1% to +0.5% 20 +0.5% Flat +0.5%
Spending +0.5% +0.1% to +0.8% 20 +0.4% +0.3% +0.5%
PCE Price Inx — — — +0.2% +0.1% +0.2%
–Core — — — Flat Flat +0.1%

Comments: Personal income rose 0.5% in October, led by gains in a
number of categories, including wages and salaries. PCE rose 0.4% before
adjustment for inflation, with durables consumption lifted by motor
vehicle sales and nondurables and services spending posting smaller
gain. Chained PCE rose 0.3%, as the overall PCE price index rose 0.2%.
The core price index was flat for the second straight month, allowing
the year/year rate to slip to a very modest 0.9% rise.

–
Weekly Jobless Claims for week of November 20
Wednesday, November 24 at 8:30 a.m. ET Actual:
Median Range Responses 20-Nov 13-Nov 06-Nov
Jobless claims 435k 420k to 445k 15 407k 441k 437k

Comments: Initial jobless claims fell 34,000 to 407,000 in the
November 20 week, a much larger decline than expected to the lowest
level since the July 19, 2008 week. Seasonal factors expected a larger
unadjusted increase in claims in the week after the Veteran’s Day
holiday week. Continuing claims fell 142,000 to 4.182 million in the
November 13 employment survey and holiday week, the lowest level since
the November 22, 2008 week and down 205,000 from the October 16
employment survey week.

–
Existing-home Sales for October (annual rate)
Tuesday, November 23 at 10:00 a.m. ET Actual:
Median Range Responses Oct10 Sep10 Aug10
Home Resales 4.49m 4.25m to 4.70m 19 4.43m 4.53m 4.12m

Comments: The pace of existing home sales fell 2.2% to a 4.43
million annual rate in October. Sales were down in October for both
single-family homes and condos, and were down across all four regions.
Supply on homes fell 3.4% to 3.864 million, a 10.5 month supply at the
current sales rate, down slightly from 10.6 in September, but still up
sharply from 7.2 a year ago. The median sales price fell 0.6% to
$170,500 in October, down 0.9% from year ago.

–
GDP for Third Quarter, second (annual rate %, chain-weighted)
Tuesday, November 23 at 8:30 a.m. ET Actual:
Median Range Responses 3Q10s 3Q10a 2Q10
GDP +2.4% +2.1% to +2.7% 19 +2.5% +2.0% +1.7%
Chain Prices +2.3% +2.2% to +2.7% 14 +2.3% +2.3% +1.9%
PCE Price Inx — — — +1.0% +1.0% Flat
–Core — — — +0.8% +0.8% +1.0%

Comments: Third quarter GDP was revised up to a 2.5% rate of growth
on stronger growth in PCE, nonresidential fixed investment, and
government spending, as well as a smaller decline in residential fixed
investment and a narrower net export gap. Inventories growth was
slightly smaller than in the advance estimate. All of the main inflation
indicators, including the chain price index, were unrevised in the
current estimate.

** Market News International Washington Bureau (202) 371-2121 **

[TOPICS: MAUDS$]

Via Reuters, a French outlet reports that an S&P official says the France deserves its triple-A status,  at the current time.

Not the most ringing endorsement I’ve ever heard, but it belies the downgrade rumors that made the rounds on several occasions earlier today.

US DATA: Nov farm prices +2.6% MOM.

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