Spain credit rating downgraded again

The woes for Spain continue to surface with Standard & Poor’s cutting its credit rating by two notches to ‘BBB-‘ which is only one notch above junk status.Spain credit rating downgraded againIn a press statement released last night S&P said ‘The negative outlook on the long-term rating reflects our view of the significant risks to Spain’s economic growth and budgetary performance, and the lack of a clear direction in Eurozone policy’.

The result of the downgrade could start to show once again in an increase in the cost of borrowing levels for the country putting further pressure on Spain to officially ask for a bailout from the ESM.

Greece is also in the spotlight as lenders negotiate with the Greek government over new budget cuts in advance of agreement on a 130 billion euro tranche required.

Comments by IMF officials suggest that the fund will seek commitments from European policy makers to help Greece in a variety of ways and provide more time.

The renewed uncertainty now surrounding Spain and Greece however is weighing on the euro which is down in the last two days.

Over to the US and the Fed beige book was released last night concluding that activity ‘expanded modestly’ last month supported with improvements in housing and auto sales.

The US economy is still not firing into life but is at least showing some positives which are not significant enough to detract from the QE programme.

The US Dollar has gained this week as Europe falls back into the spotlight reducing the appetite for risk.

The focus today will be on Europe as the market responds further reaction to the Spain downgrade as we move closer to the EU summit later this month

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