8 Nov 2013
Flash: EUR led by ECB cut and French downgrade - BTMU
FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets research at the Bank of Tokyo Mitsubishi UFJ feels that the European market will still to a degree be driven by yesterday’s surprise 0.25 point cut by the ECB.
Key Quotes
“The key event is of course the US employment report but also in focus in Europe is the downgrade by S&P of France’s credit rating from AA+ to AA. It was the second downgrade by S&P after the initial downgrade from AAA in January 2012.”
“The S&P concluded that France’s approach to budgetary and structural reforms to taxation, product, services and labour markets was unlikely to raise medium-term growth prospects in France. It predicted that the unemployment rate would still be above 10% in 2016 after an average of 8%-9% prior to 2012.”
“The unemployment situation was also weakening the resolve to implement the required reform. This is another damaging blow to the credibility of President Hollande and underlines France’s poor competitiveness that is limiting France’s ability to consolidate fiscally while improving growth prospects.”
“Like after the first downgrade, this will probably have little impact on the sovereign debt market and hence the euro – but it should serve to remind us all that a wider growth divergence with the US is still highly likely over the coming years.”
Key Quotes
“The key event is of course the US employment report but also in focus in Europe is the downgrade by S&P of France’s credit rating from AA+ to AA. It was the second downgrade by S&P after the initial downgrade from AAA in January 2012.”
“The S&P concluded that France’s approach to budgetary and structural reforms to taxation, product, services and labour markets was unlikely to raise medium-term growth prospects in France. It predicted that the unemployment rate would still be above 10% in 2016 after an average of 8%-9% prior to 2012.”
“The unemployment situation was also weakening the resolve to implement the required reform. This is another damaging blow to the credibility of President Hollande and underlines France’s poor competitiveness that is limiting France’s ability to consolidate fiscally while improving growth prospects.”
“Like after the first downgrade, this will probably have little impact on the sovereign debt market and hence the euro – but it should serve to remind us all that a wider growth divergence with the US is still highly likely over the coming years.”