Moody’s Downgrades Largely Ignored

US dollar gains in currency trading, though

Moody’s lastest downgrades initially sent a small shock through the currency market, but since then, many of the high beta currencies affected have pared losses. While the US dollar still remains higher against the euro and the pound, the European currencies have made progress today.

Moody’s downgraded sovereign debt in Spain, Portugal and Italy. Additionally, Moody’s shifted the outlook for Great Britain, France and Austria to negative. The news initially sent the euro and pound lower, but the currencies have since pared many of their losses.

Indeed, the forex market has decided to largely ignore the news as some mild optimism about a Greek debt deal emerges, and as the German ZEW comes in higher than expected. There is still some mild uncertainty in the markets, and the US dollar has the upper hand, but its gains have been limited. 

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