EUR/USD Stands Steadfast After Italy’s Outlook is Downgraded by S&P

Speaking Factors:

Italy outlook revised decrease to destructive from steady by S&P, affirmed at ‘BBB’

Fitch affirms UK at ‘AA’ steady outlook whereas Germany affirmed by S&P at ‘AAA’ steady

The forex’s muted response is essentially because of the report’s launch time

After per week of bother for equities, a remaining blow was dealt to international markets following the market’s shut on Friday. Ranking company Commonplace & Poor’s downgraded Italy’s outlook to destructive from steady amid ongoing finances disagreements with the European Union.

Conversely, S&P affirmed Germany at ‘AAA’ with a steady outlook. Whereas Fitch rankings launched their studies on the UK, Norway, Sweden and Denmark.


The EU member has turn into the main target of worldwide markets as a showdown between the federal government in Rome and European Union officers in Brussels highlights the rising divide between the 2 events. The finances disagreement is seen as a danger to the bloc’s stability and the frequent forex, leading to sustained EUR/USD weak point as of late. Additional, an equivalent outlook downgrade was issued final week by Moody’s.

EUR/USD Worth Chart Hourly, October 22nd – 26th

EUR/USD price chart on italy downgrade.

Given the time of the report’s launch, EUR/USD was largely detached as European banks have been closed and the weekend had begun. Whereas Friday’s quick response could have been negligible, outlook cuts are sometimes preludes to a rankings downgrade and thus a downgrade from two companies is a worrisome signal for Italy and the European Union if an settlement is just not met.

United Kingdom

Additionally affirmed Friday was the UK. Fitch affirmed the nation at ‘AA’ with a destructive outlook. Political divisions inside the UK concerning the nation’s withdrawal from the EU and the framework for future EU-UK relations have been cited as key causes for the destructive outlook. The Pound was equally unresponsive.

GBP/USD Worth Chart Hourly, October 22nd – 26th

GBP/USD price chart on UK rating

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Unsurprisingly, Commonplace & Poor’s affirmed Germany at ‘AAA’ with a steady outlook. Germany continues to point out constant financial power and monetary responsbility.

Norway, Sweden and Denmark

The Nordic international locations additionally had their rankings affirmed, all receiving an ‘AAA’ grade accompanied by steady outlooks. The affirmations weren’t shocking given the fiscal duty and financial situation of every nation.

Bigger Implications

Whereas not instantly felt, the downgrade will certainly weigh on international market sentiment. The outlook is successfully a vote of no-confidence from Commonplace & Poor’s and the Italian finances points have been one of many headline points plaguing markets in current weeks.

–Written by Peter Hanks, Junior Analyst for

Contact and observe Peter on Twitter @PeterHanksFX

Learn extra: S&P 500 to Look Elsewhere for Help After Disappointing Earnings

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