- Portugal’s credit rating slashed 4 notches by Moody’s to Ba2, below investment grade
- US factory orders rise 0.8% in May
- UK”s Osborne: European sovereign risk biggest risk to UK banking system
- Trichet: ECB attached to price stability
- Greek banks continue to shed retail deposits
- US 10-year note yield falls 5 bp to 3.13%
- S&P 500 falls 0.1% to 1338
- Oil rise $2 to 96.94, gold rises $30 to $1515
It was a pretty dull session during US hours except for a brief slide to 1.4445 late in the European morning on rumors that the fiscally hawkish Italian finance minister had been cashiered. We recovered shortly there after and edged higher to reach 1.4485 at mid-afternoon when Moody’s announced a surprisingly large 4-notch downgrade to Portugal’s sovereign debt rating. Another package will likely be needed to tide Portugal over until sometime after 2013 when it should be able to return to the public markets. EUR/USD slumped to 1.4395 before stabilizing. 1.4435/40 is now seen as important resistance on rebounds. Moving averages converge around 1.4385/90, providing support.
Swiss surged after the Moody’s ratings cut, hammering USD/CHF from 0.8455 to 0.8385 as EUR/CHF slumped 1.2240 to 1.2100.
AUD and CAD surrendered some gains on the Moody’s maneuver but outperformed on the day as commodities rallied despite relative USD strength during much of the NY session. AUD closes at 1.0685, USD/CAD at 0.9632.
