Friday, 28 May 2010

Euro Drops as Spain Losses AAA Rating

The Euro dropped today against most of the major currencies. The Euro fell from a daily high of 1.2450 against the Dollar, and currently the EUR/USD pair is trading at the 1.2300 level. The Euro dropped against the Yen as well.

The main reason for the Euro's depreciation is the announcement that Fitch Ratings cut's Spain's credit rating to AA+ form AAA. This added to concerns that the Spanish debt crisis will be elongated, and will further damage the region's sovereign debt crisis. This has reduced risk-appetite in the market, and turned investors to look safer assets, such as the Dollar and the Yen.

Looking ahead to next week, the most interesting publication looks to be the U.S. Non-Farm Payrolls on Friday. This is considered to be the leading employment report in the U.S, and tends to have an immense impact on the market.