UK Downgraded From AAA by Moodys First Time Since 1978

With just one hour left to European trading on Friday, Moody’s stripped the UK of its AAA rating. This is the first time since 1978 that the UK was downgraded from its top triple A rating. Moody’s cut the rating down to Aa1 noting weak outlook for the country’s economic growth and increasing debt. They mentioned that UK debt looks unlikely to be recovered until 2016. This sent the GBP tumbling in price although limited loss in its value is expected as the outcome of Moody’s downgrade was expected for a while.

In last week’s Bank of England policy meeting showed that the UK is moving closer to another round of monetary easing. While an inflation change will be set aside in order to stabilize and increase growth.

In Europe, the markets await the results of the elections in Italy. The elections are close run, but concerns surround an outcome of a hung election which may block efforts to carry out further economic reforms to stabilize the country’s economy.

Asian Trading opened the week to heavy losses for the Yen, dropping 0.97 per cent against the USD and the Nikkei rising 2.34 per cent, as Japanese PM Shinzo Abe gets closer to naming a new BoJ Governor. It is thought the new Governor, perhaps Asian Development Bank President, Haruhiko Kuroda, will engage heavily in monetary easing policy which would further weaken the Yen .

Forex
EUR/GBP reached 0.8766 this morning in the European session, the highest level since Oct 2011, the pair then stabilized at 0.8756 a gain of 0.77 per cent

The EUR was higher against the USD and the YEN, climbing 0.64 per cent to 1.3721 for EUR/USD and 1.1per cent gain to 124.48 for the EUR/JPY.

The USD reached highs against the YEN and the GBP this morning and even the EUR which is being watched closely amidst the Italian elections. USD/JPY was up 0.56 per cent to 93.88, a new 33 month high. GBP USD dropped 0.23 per cent to 1.5139 after the new UK Moody’s downgrade. The EUR/USD rose 0.34 per cent to 1.3232.

Stocks
Japan Nikkei finished higher by 2.24 per cent on further Yen devaluing talks.. The Hang Seng in hong Kong was little moved and the Shanghai Composite Index gained 0.30 per cent on the back of China Manufacturing data which stayed above 50 but nevertheless dropped from 52.3 to 50.4.

US stocks are expected to open higher in US session trading and US budget data is to be announced later today.

Euro Zone stocks climbed higher this morning even after the negative manufacturing data from China and the Moodys AAA downgrades in the UK. The EURO STOXX 50 was up 0.93 per cent, the French CAC40 up 0.66 per cent and German DAX 30 hiked up 1.10 per cent.

Commodities
Gold futures were traded higher in this morning European session. Gold futures for April on Comex trading at $1590.30. A move away from the seven month lows seen by the Gold last week.

Crude oil crept upwards in Asian trading today with an increase of 0.03 per cent to $93.16 per barrel as investors seemingly were grabbing Crude Oil at a cheap price.

Wheat prices during European session this morning traded at their lowest since June 2012 as concerns abound as to the crop-growing conditions in US.