Euro exchange rate today: Currency markets shrug off latest Fitch downgrade, but outlook is negative for EUR-USD say UBS

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Category: Exchange Rates

Published on Wednesday, 13 June 2012 10:16

Written by Sam Coventry

"We also believe that the Fed will not announce another round of QE at next week’s FOMC meeting unless conditions in the Eurozone deteriorate rapidly and spillover into global financial markets" - Gareth Berry at UBS.

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The euro (Currency:EUR) has moved decidedly higher this morning as markets shrug off a new Fitch downgrade to a host of Spanish banks.

The euro pound FX rate is 0.31 pct up on a day-to-day basis at 0.8056 while the euro dollar exchange rate is 0.33 pct higher at 1.2544.

PS: We have update our IMT site with the latest FX forecast, access is issued Free through this Facebook entrance page.



Fitch followed up last week’s three-notch downgrade of the Spanish sovereign by also cutting the long term ratings of 18 Spanish banks.

The euro dropped on the headline but quickly recovered. Germany stuck to its long-standing position ruling out the introduction of commonly-issued Eurozone bonds anytime soon.

With regards to the outlook for the euro, Gareth Berry at UBS says:

"We believe downside risks to EUR-USD will continue to dominate and that any respite for risk currencies will be short lived. We also believe that the Fed will not announce another round of QE at next week’s FOMC meeting unless conditions in the Eurozone deteriorate rapidly and spillover into global financial markets."

Also making the headlines was news that Germany’s Chancellor Merkel repeated that now is not the time to discuss euro bonds and argued that any move towards joint sharing of fiscal burdens requires that member states first agree on joint control over their budgets.

Asmussen, one of Germany’s representatives on the ECB’s Governing Council, backed Merkel’s long standing position that euro bonds should not be seen as an instrument for managing crises, stressing that these would only “come at the end of the long road to fiscal union”.