S&P downgrades Spain to AA, Outlook negative

Add Spain to the list of EU sovereigns cut by S&P in the last two days. EUR/USD is breaking to new lows for the year, falling as low as 1.3131 so far. Expect 1.3100 barriers to provide a speed-bump for the EUR

UPDATE: S&P says Spain is set for a more protracted period of sluggish activity than previously assumed. Real GDP is projected to grow by an average 0.7% annually through 2016.

Spanish banks are being hammered after the news as the sovereign debt crisis leads to banking instability, the reverse of the 2008 debacle.