Moody’s just downgraded Goldman’s debt and left them on watch for further downgrade, spoiling the moderate bid seen in US equity futures after their earnings report. Dealers fear aggressive easing from the Fed as core inflation fell to zero last month and the headline fell 1.7%.
The buck is weak across the board, even against the yen despite ongoing concerns that the BOJ could intervene to weaken the local unit. The BOJ governor indicated overnight that the Bank could ease further later this week but the warning failed to have the desired impact on exchange rates.
EUR/USD trades at session highs of 1.3743 while USD/JPY is at 89.75. Support for USD/JPY is at 89.50, the 61.8% retracement of the recovery from 88.25 to 91.55.
