(GR) Ratings agency S&P revised Greece’s sovereign outlook to negative, affirming its rating a CCC. Following delays in implementing budgetary consolidation measures and a worsening Greek economy, S&P believed Greece is likely to require additional financing for 2012 under the EU/International Monetary Fund (IMF) program (EU/IMF Program).
(DE) ECB said to be awaiting German court decision prior to intervening – financial press
Note: ECB’s Draghi from Aug 2nd post rate decision press conference that the final decision to come only after the German Constitutional Court rules on the preliminary injunction on Sept 12th
(UK) GBP was off session lows as the BOE quarterly inflation report was not as dovish as expected:
How to interpret these headlines?
Market saw US Dollar strengthening on the back of S&P’s reminder of the dire situation in Greece, and the sentiment was further compounded by ECB’s reminder of the upcoming German Court’s decision on the injunction to prevent Germany’s participation in the ESM until the court ruling, which if you remember, could possible drag into the 2013… Of course, the speculation of a sharp downgrade in today’s BOE Inflation Report didn’t help either, as the USD gained across the board against all majors except for the JPY…
Although we did see a sharp turn in the Sterling following the better than expected Inflation Report and Governor King’s comments, it is my believe that GBP’s strength is not sustainable, nor is the US Dollar strength… I believe what we are seeing today is just the normal ebbs and flows of the market, and I’ll take this opportunity to position my trades to go LONG on the EUR, CHF against the USD… I’ll hold off on going LONG on the Sterling, as UK’s economy is definitely worse than what BOE believes.
US Dollar Strengthening On Euro Consolidation
August 8, 2012 by 1 Comment