Forex: Euro slides across the board after Portugal downgrade

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The Euro plummeted during the European trading session after some negative news. The Eurozone Retail Sales index was released much lower despite expectations of a 0.6% growth year on year, reporting at 0.1%. Previous reading was at 0.4% . On the month, the index declined to 0.1% compared to a previous reading of 0.2% increase.

 

In addition to these news, Moody’s released Portugal’s credit rating lower by one notch from A3 to Baa1. Last month Portugal’s Prime Minister Jose Socrates resigned after parliament rejected his austerity measures prior to the E.U. Summit. Moody’s warned that the new incoming government would have to request financial aid from the European Union.

 

The Euro had been gaining strength prior to today based on expectations of a rate hike by the ECB. However, investors soon priced in this interest rate increase affecting the Euro as well.

 

Yesterday the Single Currency reached a new month high against the US Dollar to hit 1.4267. Today, after opening at 1.4201, EURUSD lost 44 pips to touch a low of 1.4158. FOMC minutes from the US Fed later this evening may affect the pair even greater

 

EURGBP lost 88 pips to plunge from 0.8811 down to a session low of 0.8724. Meanwhile, Sterling was boosted by positive data which reported the country’s PMI Services Index accelerated growth much faster than expected, giving a reading of 57.1, up from 52.6.