Nervous markets awaited the open, after the Moody’s Rating Agency downgraded the US outlook, from stable to negative. The reason was the fiscal situation in the US and overall debt. Fitch had already downgraded US debt, from AAA to AA+, nearly three months ago. The US fiscal and debt situation has been spiralling downwards for the last couple of years, with the Administration choosing to spend the economy into growth, as an economic strategy. US equities were surprisingly positive, to open the weeks trade, ahead of key inflation data. US CPI numbers will be released tonight, and this is the likely driver of bond, equity and currency markets. The USD was steady, with the EUR drifting below 1.0700, while the GBP nudged up above 1.2250.
Commodity currencies were steady, with the AUD looking to regain 0.6400, while the NZD held below 0.5900. NZ PSI and PCI numbers remained in contraction mode, offering little encouragement to markets, as the NZ people still await the composition of their government. All eyes will now focus on the US CPI number set to be released later tonight.