Euro extends recent slide against dollar, and takes other European majors down as more bad news came out of Europe. Portugal's credit rating was downgraded by Fitch yesterday from BBB- to BB+ with a negative outlook, i.e., into junk status. Fitch said the country's sovereign credit profile is "no longer consistent" with an investment grade rating due to "large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook". In response to the downgrade, Barclays Capital will cut Portugal government debts from its Euro Treasury Index. While Citigroup will keep it in its European Government Bonds and World Government Bonds indices, it noted that another one-notch downgrade from S&P will take Portugal out of the index. Talking about downgrades, Moody's also lowered Hungary's foreign- and local-currency bond rating by one notch from Baa3 to Ba1, also at junk level as there are uncertainties on the government's ability to meet its target of fiscal consolidation and debt reduction.
While there is still no sign that the European debt crisis is going to end any time soon, Germany Chancellor Merkel continued to express her strong opposition to Eurobonds after meeting with French President Sarkozy and Italian Prime Minister Monti. There were speculations that Germany will soften its stance on the issue after the poor bond auctions but it's seems there is no change in their position yet. Merkel reiterated her opinion that the eurobonds are "not needed and not appropriate". Meanwhile, she also ruled out the expansion of ECB's role in fighting the debt crisis. Instead, Merkel will make a join proposal with France in modifying the European treaties to entranche tougher fiscal discipline within Eurozone. The plan will be submitted in the December 9 EU summit.
Though, a bit of a better news is that China's sovereign wealth fund, the China Investment Corp, may give indirect support to Europe. The fund's executive vice president Jesse Wand said that it will look at investment opportunities in Europe during the process of helping companies or countries in Europe to recover. Meanwhile, he also said that the Chinese government is studying "which way and through which products" to support Eurozone.
Data released from Japan today saw national CPI fell -0.1% yoy in November, the first drop since January. While the BoJ projected CPI to gain turn positive again in the year starting April, some economists expect CPI to stay negative for as long as two years. Japan Finance Minister Azumi reiterated that he's cautiously watching yen's movements. A focus today will be on Italy's auction of EUR 8b bills.
While there is still no sign that the European debt crisis is going to end any time soon, Germany Chancellor Merkel continued to express her strong opposition to Eurobonds after meeting with French President Sarkozy and Italian Prime Minister Monti. There were speculations that Germany will soften its stance on the issue after the poor bond auctions but it's seems there is no change in their position yet. Merkel reiterated her opinion that the eurobonds are "not needed and not appropriate". Meanwhile, she also ruled out the expansion of ECB's role in fighting the debt crisis. Instead, Merkel will make a join proposal with France in modifying the European treaties to entranche tougher fiscal discipline within Eurozone. The plan will be submitted in the December 9 EU summit.
Though, a bit of a better news is that China's sovereign wealth fund, the China Investment Corp, may give indirect support to Europe. The fund's executive vice president Jesse Wand said that it will look at investment opportunities in Europe during the process of helping companies or countries in Europe to recover. Meanwhile, he also said that the Chinese government is studying "which way and through which products" to support Eurozone.
Data released from Japan today saw national CPI fell -0.1% yoy in November, the first drop since January. While the BoJ projected CPI to gain turn positive again in the year starting April, some economists expect CPI to stay negative for as long as two years. Japan Finance Minister Azumi reiterated that he's cautiously watching yen's movements. A focus today will be on Italy's auction of EUR 8b bills.