- Moody’s downgrades Ireland to Aa2 outlook stable from Aa1, outlook negative
- CEBS says to release European bank stress test results on an aggregated and bank-by-bank basis on July 23 from 16:00 GMT. Banks or national supervisors to publish results of stress test
- Fitch upgrades Estonia to A, outlook stable
- Hungary EconMin: “We told IMF/EU that further austerity was out of the question” Expects to eventually reach agreement with IMF/EU
- Moody’s: Hungary’s current credit rating appropriate at this stage. Expects Hungary govt to reach agreement with international lenders in the autumn
- German FinMin; Q2 growth in GDP likely “significantly stronger” that Q1 GDP growth
- EADS Europe’s largest aerospace and defence group says ready to use 8 bln cash war chest to make acquisitions in the U.S. – FT report
- BUBA: Imbalances in peripheral euro zone economies are a source of danger for whole currency zone
Euro has had a good morning making across the board gains, EUR/USD up at 1.2955 from early 1.2910, EUR/JPY up at 112.85 from around 111.85, EUR/GBP up at .8470 from around .8430 and EUR/CHF up sharply at 1.3640 from early 1.3515.
The moves come despite release of European bank stress tests at end of the week. It’s been lively, well at least for a Monday.
EUR/USD fell initially, slipping below 1.2900 to session low 1.2872 in response to Moody’s downgrade of Ireland. The BIS stepped in buying around the low and we were soon rallying strongly as European stocks ticked higher and as EUR/CHF set off like a rocket. No word of SNB intervention, just an acceleration of the short covering we’ve seen of late.
The EUR/USD rally slowed when it ran into sell orders up at 1.2940/50 with sovereign selling noted, but it wasn’t long before stops through 1.2970 were tripped and 1.2991 session high posted. An Asian central bank sold above 1.2980 helping cap the recovery.
Cable down at 1.5285 from early 1.5310. Sell orders up at 1.5340/50 capped the upside and Uk clearer selling was notable on way to session low 1.5261. Stops noted just below 1.5260. EUR/GBP up at .8470 from early .8430 with U.S. bank notable seller above .8480.
USD/JPY up at 87.10 from early 86.65, but off session high 87.21. Sell orders from 87.00 up to 87.30 have so far proved durable barrier to upside. Despite Japan holiday, talk of Kampo buy interest lined up below 86.50. 86.65 and 86.95 option expiries noted at todays New York cut, the former said to be of decent size.
