Binary Options News : October 11, 2012

Spanish Downgrade Keeps Markets In Check

The downgrading of the Spanish credit rating by Standard and Poor’s helped keep the demand for the USD strong in overnight Asian trading as investors moved out of stocks and other high yielding currencies.

Standard and Poor’s reduced Spanish long term debt from BBB+ to BBB-, making it just one level higher than junk status whilst cutting its short term credit rating to ‘A-3′ from ‘A-2. Standard and Poor’s also posting warnings of possible additional downgrades in the future and warned of the record rising unemployment and spending constraints as being likely to fuel social discontent and add to already growing friction between Spain’s central and its debt laden regional governments.

The S&P downgrade highlights the deepening recession in Spain and the increasing pressure that Spain faces. Spain currently has the highest unemployment levels in the whole of the Eurozone with nearly 50% of all 16-24 years unemployed. Despite recent drastic spending cuts and tax rises implemented by the Spanish Government, where it unveiled its latest budget designed to make savings of around 13bn euros. The Government in Madrid has said that the country’s overall debt levels will increase in 2013 to more than 90% of total economic output. S & P stated that “The deepening economic recession is limiting the Spanish government’s policy options” and with borrowing costs have remaining high for months, many consider it only a matter of time until Spain is forced to request financial assistance in the form of a bailout from its Eurozone partners.

Currencies

The USD found support once again as a safe haven but not in high volumes and was up against just currencies, as investors await the figures released today in the US on initial jobless claims and its trade balance. The USD was up 0.06% against the EUR, up 0.02% against the CHF, but the greenback was down against the JPY, falling 0.22%

Stocks

Asian trading on Thursday saw stocks lower with Hong Kong’s Hang Seng Index down 0.08%, Australia’s S&P/ASX200 down 0.02%, whilst Japan’s Nikkei 225 Index fell by 0.76%.Japanese data released overnight helped push down stocks as Japan’s Economic and Social Research Institute reported that Japan’s core machinery orders contracted 3.3% in August after increasing 4.6% in July.

Today’s Outlook

Judging from the trading made in Asia overnight, traders can expect a strong day’s trading with swings already seen in the currency, commodity and stocks markets. Today is a busy day on the economic calendar which indicates a volatile days trading equating to increased profit opportunities for the binary trader. Today, the ECB is to publish its monthly bulletin, with analyzes current and future economic conditions from the perspective of the ECB. In the US, government data on the country’s trade balance, initial jobless claims, import prices and crude oil stockpiles are all released, set against the backdrop of the talks being held in Tokyo today by the G7 group of industrialized nations’ finance ministers and central bankers.

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