S&P downgraded Greece to ‘CCC’ causing oil to tumble on demand fears, sending Treasury & US dollar higher. Euro spiked higher while the US major indices closed mixed. Gold fell!
On Monday, credit rating agency, S&P Ratings Services downgraded Greece’s credit rating to junk territory ‘CCC’ due to the significantly likelihood of a Greece default over the next 12 months. This caused demand fears in energy and Oil tumbled. The fact that global health concern points to a slowdown, may send oil even lower and drag other commodities further south
Treasury buyers took the lead briefly following S&P's downgrade of Greece. The US dollar rose back to the flat line.
With Greece being downgraded the Euro should fal but on other news, Bank of England’s Monetary Policy Committee member, Martin Weale renewed his case for an immediate hike in Bank Rate, and he said there were "significant risks to delay." Weale argued that a rate hike now may even reduce the need for greater monetary tightening in the future, and that the Bank Rate could rise by less than the market is currently pricing in. As a result, the British pound and the Euro soared.
In line with S&P downgrading Greece, Gold should rise, but with the recent fall in global equities for the past six weeks as fears on the health of the global economy would weaken, investors sold Gold to cover losses in equity markets. Gold futures closed down 0.9% to US$ 1,515.60 an ounce. Should margin call arise in equities, Gold may tumble further. EUR/CHF is soaring, sparked by the gold slump.
Earlier on, Christchurch was struck by another earthquake which might cause Central Bank Governor, Alan Bollard to delay interest rate increases until next year. The New Zealand dollar fell.
China will post its latest CPI data later this morning. US Retail Sales and CPI would be closely followed later.
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