- Moody’s downgrades SocGens’ debt and deposit ratings by one notch to Aa3 from Aa2. Downgrades Credit Agricole one notch to Aa2 from Aa1. Maintains review for downgrade to BNP Paribas’ Aa2 long-term ratings
- EU’s Barroso: The European Commission will soon present options for introduction of euro bonds. Some euro bond proposals could be implemented under current treaty, others would need treaty change
- French govt spokeswoman: Sarkozy told cabinet France will do everything to save Greece
- ECB’s Noyer: Doesn’t believe banks’ stocks will be further hit by Moody’s downgrades. Downgrades no news
- Scuttlebutt: Warren Buffett may be interested in taking 10% stake in Deutsche Bank
- BOJ’s Miyao: Japan business sentiment improving as a whole
- S&P: Japan’s post-quake economic recovery likely to fall short of prior forecasts. Several factors, including slow govt policy response, have hamstrung Japan economic recovery
- UK August jobless claims +20K, better than median forecast of 35k. Claimant count rate 4.9%, unchanged from previous month and in line with Reuters’ median forecast (Some people had been looking for an increase to 5.0% though)
- Moody’s: ICB report has no immediate rating impact for UK banks, but is credit-negative for bondholders longer-term
- China’s vice premier Li: Uncertainties increase in global economy
- German private banking association cuts growth forecasts for German economy. To 2.8% from previous 3.0%. To 1.1% for 2012 from previous 2.3%
- ECB’s Costa: Euro zone has better external deficit situation than U.S. , U.K.
- Magnitude 5.9 quake hits central Chile – US geological survey says
EUR/USD sits up at 1.3720 from early 1.3635, having been as high as 1.3742. It wasn’t all plain sailing for the single currency though. Announcement that Moody’s had downgraded a couple of French banks (see above) ellicited a brief knee-jerk dip below 1.3600 just as European traders were arriving at their desks.
But as ECB’s Noyer said the downgrades were really no news, as they had been widely anticipated. We were quickly above 1.3600 again, and then comments from EU’s Barrosa re euro zone bonds (see above) had us headed higher. As European stocks headed higher, so EUR/USD slowly extended its’ recovery.
Macro funds, BIS and Eastern European names some of the notable buyers seen on the way up.
The market will be waiting intently to see what comes from the conference call between Papandreou, Merkel and Sarkozy, scheduled for 16:00 GMT. Market will be looking for strong reassurances that a Greek default is not in the offing.
Cable up at 1.5800 from early 1.5760. The pairing initially came under heavy pressure and tested barrier option interest touted at 1.5700 (session low 1.5707). But defence was stout and the better than expected jobless report (see above) helped the pairing extend it’s recovery from the lows.
USD/JPY sits at 76.80, effectively unchanged on the day.