FOREX-Euro slips after Moody’s slashes Ireland’s rating

* Euro down after Moody’s downgrade of Ireland

* Leveraged names, semi-official names dump euro

* Euro eyes 200-day moving average at $1.3105
(Updates prices, adds quotes, details, changes byline,
dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Dec 17 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) against the
dollar on Friday and looked set to extend losses after a
multi-notch downgrade of Ireland’s credit rating overshadowed
solid German economic data and underscored the severity of the
euro zone debt crisis.

Moody’s Investors Service slashed Ireland’s credit rating
by five notches to Baa1 with a negative outlook from Aa2 and
warned further downgrades could follow if Ireland was unable to
stabilize its debt situation. For more see [ID:nLDE6BG0EG].

The euro hit a low around $1.3220, with key support seen
around $1.3105, its 200-day moving average. A break below could
see the currency retest the $1.30 level and slide toward its
December low of $1.2970, traders said.

“Overall the outlook for the euro doesn’t look very
positive. Going into the year-end, we continue to favor
euro/dollar breaking lower,” said Mary Nicola, currency
strategist at BNP Paribas in New York.

An agreement by European Union leaders to set up a
permanent crisis management mechanism from mid-2013
disappointed investors who had hoped for more active measures
such as expanding the European Financial Stability Facility or
issuing joint European sovereign bonds, so-called E-bonds.

The euro last traded at $1.3223, down 0.1 percent on the
day and near its session low of $1.3217 (EUR=EBS: ) set on
trading platform EBS.

The euro zone single currency had climbed as high as
$1.3360 after the Ifo index showed German business morale hit
its strongest since 1991 in December. [ID:nLDE6BG0KP]

Selling before a central bank fixing helped to accelerate
the euro’s losses in thin liquidity, traders said. Leveraged
accounts and a semi-official European name were also seen
dumping the currency.

Boris Schlossberg, director of currency research at GFT in
New York, said the strong German data could limit the euro’s

“Germany’s financial health is absolutely vital to the
stability of the European monetary union and as long as its
economy can maintain momentum, euro/dollar’s decline is likely
to be contained,” he said.

Euro zone graphic package:

Euro zone credit ratings:


EU leaders on Friday agreed at a summit to try to lengthen
the maturities of new sovereign bond issues, and confirmed that
private investors will be involved in the future euro zone
rescue mechanism, a draft statement showed. [ID:nLDE6BG0O1]

While officials acknowledged there was resistance to the
idea of issuing joint euro bonds, analysts said the lack of any
new insight into how the EU will address the issue of debt had
helped to sour sentiment for the euro.

“What we’ve heard from the EU summit has been lukewarm, not
as informative as some in the market were hoping,” said Henrik
Gullberg, currency analyst at Deutsche.

“The euro’s rally earlier this week may have been fueled by
expectations the EU would offer more clarification, and there
may be a gradual realization that that is not the case.”

Paul Robson, currency strategist at RBS, said a bearish
euro view was also reflected in the euro crosses, with the
single currency hitting a record low against the safe-haven
Swiss franc (EURCHF=R: ). The euro fell (Read more about the trembling euro. ) to a low of 1.2720 francs
before recovering to 1.2772.

The Swedish crown rose to its highest against the euro
since 2006 (EURSEK=D4: ).

The dollar was marginally lower at 84.01 yen, having
repeatedly failed to break cleanly above 84.50 (JPY=: ) since
late November in spite of higher yields on the back of
improving economic data.
(Additional reporting by Anirban Nag and Naomi Tajitsu in
London; Editing by James Dalgleish)

FOREX-Euro slips after Moody’s slashes Ireland’s rating