Forex Investment and Currency Trading

The NZD is a notable under performer overnight with weak business confidence data and S&P putting the country’s credit rating on negative watch; sovereign risk is gaining a little more attention this week, following S&P’s moves to finger weaknesses in the Irish, Greek and Spanish fiscal positions
over the past few days. Despite the rating agencies apparent confidence in the US’ fiscal position, some of the issues raised by S&P with regard to the NZ and the peripheral euro zone economies may count for some other major economies as well; other ratings downgrades could follow and it remains to be seen whether the rating agencies’ apparent confidence in the US’ sovereign credit rating can be maintained. Intra-European sovereign spreads are widening out again after stabilizing around the turn of the year; the 10-year German Bund/Italian BTP spread has leaked out to -142bps this morning, the widest gap since 1997.