EUR/USD lower, presently at 1.3150.
- Moody’s cites uncertainties about economic growth after austerity among reasons for Portugal review (damned if you do, damned if you don’t)
- Concerns about Portugal’s ability to access markets at sustainable price
- Concerned about Portugal government debt metrics if banks need support to regain market access
- One or two notch downgrade possible for Portugal, solvency not in question
- Portugal approaching EFSF for funding could positively impact short-term uncertainties
- But Portugal seeking external help would raise concerns about medium-term market access
