Rating Agencies Keep Finger On The Trigger - 11.10.2012

The worsening economic conditions in the Euro zone countries have not gone unnoticed by rating agencies: a little wile ago Standard and Poor's has lowered Spanish sovereign credit rating to (BBB-) for the third time this year, that is just one grade away from the “garbage” status. The agency is referring to increasing recession that puts limits on chances for economic stabilization. It is obvious that increase of the default risk could destabilize the situation in Spanish debt market, where the yield of 10-years bonds came close to 6%. The news coming from S&P pushed EUR/USD to mew high at 1.2824. Obviously, recent downfall has an impulsive (5 waves) nature that signalizes about continuation of the downtrend started on September 17th. When the trend is confirmed, the pair can zero on 1.27. Taking technical signals into account in short terms, Euro can grow to its local maximum slightly higher than 1.29. The intraday support is seen at 1.2855. As for macro statistics, the strong figures on Australian labor market should be noted. Jobs are increased by 14500 that is 3 times higher than the market consensus. Aussie has a chance to get stronger vs. US dollar, at least, till the next resistance is found around 1.0330.

Spanish 10-years bonds yield, daily chart