Corporate foreign exchange news
Moody's and Greece fuel global uncertainty
Thursday, 16 February 2012 08:54:31 GMT
The Australian dollar slid in Asian trade today as investors looked towards securer currencies.
Global sentiment took a knock as Moody's rating agency placed high profile countries in Europe on warnings, saying they were increasingly vulnerable to the eurozone crisis. Ratings were chopped in Italy, Spain and Portugal, with France, Britain and Austria issued warnings over their vulnerability of euro-shifts.
The rating agency said the region's weak economic prospects are threatening "the implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness". Market confidence "is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks".
Austria, France and Britain were put on negative outlooks, but retained the top AAA rating. Italy went down to A3 from A2; Spain went from A1 to A3, and Portugal was downgraded one step to Ba3 from Ba2. Slovakia, Slovenia and Malta moved one step down also.
The negative moves had an impact on the currency markets, with investors also eying up events in Greece. Eurozone finance ministers are demanding more oversight of the Greek economy and bigger austerity cuts in the country. Although talks have made substantial progress, the EU and IMF are becoming strict over the terms of the loan.
The two pieces of uncertain news had an impact on riskier currencies around the world, with the more speculative investments being cut back. The Australian dollar fell despite unemployment falling by 0.1 per cent in January. This signalled a rise of 46,000 jobs in the country, according to the Australian Bureau of Statistics.
The flow of money into emerging market currencies seems to have eased, after a speculative start to the year. Michael Lee, co-manager of the Wells Fargo International Bond Fund, said "markets are taking a pause".
"The Greece situation is creating near-term volatility," which will be further exacerbated by the move from Moody's. The positive start was due to liquidity injections by the European Central Bank, followed by US Federal Reserve's indication that it would keep interest rates at the current low levels until 2014.For more information on foreign exchange treasury services and risk management, visit our Corporate FX sitePublished by Mark Thompson
Global sentiment took a knock as Moody's rating agency placed high profile countries in Europe on warnings, saying they were increasingly vulnerable to the eurozone crisis. Ratings were chopped in Italy, Spain and Portugal, with France, Britain and Austria issued warnings over their vulnerability of euro-shifts.
The rating agency said the region's weak economic prospects are threatening "the implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness". Market confidence "is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks".
Austria, France and Britain were put on negative outlooks, but retained the top AAA rating. Italy went down to A3 from A2; Spain went from A1 to A3, and Portugal was downgraded one step to Ba3 from Ba2. Slovakia, Slovenia and Malta moved one step down also.
The negative moves had an impact on the currency markets, with investors also eying up events in Greece. Eurozone finance ministers are demanding more oversight of the Greek economy and bigger austerity cuts in the country. Although talks have made substantial progress, the EU and IMF are becoming strict over the terms of the loan.
The two pieces of uncertain news had an impact on riskier currencies around the world, with the more speculative investments being cut back. The Australian dollar fell despite unemployment falling by 0.1 per cent in January. This signalled a rise of 46,000 jobs in the country, according to the Australian Bureau of Statistics.
The flow of money into emerging market currencies seems to have eased, after a speculative start to the year. Michael Lee, co-manager of the Wells Fargo International Bond Fund, said "markets are taking a pause".
"The Greece situation is creating near-term volatility," which will be further exacerbated by the move from Moody's. The positive start was due to liquidity injections by the European Central Bank, followed by US Federal Reserve's indication that it would keep interest rates at the current low levels until 2014.For more information on foreign exchange treasury services and risk management, visit our Corporate FX sitePublished by Mark Thompson
