US dollar today: Spanish downgrades trigger overnight buying; increased USD strength forecasted as we head into weekend
- Category: US Dollar Exchange Rate
- Published on Thursday, 14 June 2012 09:16
- Written by Will Peters
"Newswire reports indicated that deposit withdrawals from Greek banks continue at a worrying pace ahead of the Greek elections this weekend" - UBS.
The US dollar (Currency:USD) is seeing increased interest come mid-morning in Europe.
The demand for the dollar comes as investors seek to cut risk ahead of what is likely to be a volatile week ahead.
Looking at the spots, the pound dollar exchange rate is 0.18 pct down on Wednesday at 1.5478. The euro dollar exchange rate is 0.09 pct lower at 1.2545. (We have updated our FX forecast pages on our IMT site, access is Free via this Facebook gateway).
Overnight, the US dollar saw growing demand after a pair of Spanish sovereign ratings downgrades from two separate ratings agencies.
Moody’s cut Spain three notches to Baa3 – just one notch above junk status.
Egan-Jones cut Spain’s rating to CCC+, sending it even deeper into junk territory.
Looking ahead investors will seek to increase their cash holdings ahead of the Greek elections this weekend.
"Newswire reports indicated that deposit withdrawals from Greek banks continue at a worrying pace ahead of the Greek elections this weekend. There seems little prospect of a concerted policy response before leaders next meet at the June 28-29 EU summit, although the German press have already suggested that a third bailout of Greece is in the pipeline," says Gareth Berry at UBS in a morning FX note.
UBS advise that they remain bearish on the euro and keep our EUR-USD targets for 3m at 1.20 and 12m at 1.15.
In the US, the data remained weak with retail sales dropping 0.2% m/m in May.