American focus: the yen is under pressure.
The yen slid against all of its major counterparts after Japan’s credit rating was lowered for the first time in nine years by Standard & Poor’s.
Egypt’s pound dropped to a six-year low against the dollar as the opposition leader Mohamed ElBaradei returned to Cairo and urged the government led by President Hosni Mubarak to “stop practicing violence.” The yen touched the lowest in two months against the euro on concern Japan’s Prime Minister Naoto Kan hasn’t done enough to curb the world’s biggest debt load.
“If you look at the statement that the S&P put out about Japan, you can essentially take the context and put it on top of the United States or Europe,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “This negative sentiment plus overall positive economic data in the U.S. could push dollar-yen over 84 by the end of next week.”
Japan’s credit rating was lowered to AA- as persistent deflation and political gridlock undermined efforts to reduce a 943 trillion yen ($11 trillion) debt burden.
Bond futures fell on concern the downgrade will push up the cost of borrowing for Japan, where public debt is about twice the size of gross domestic product. Vice Finance Minister Fumihiko Igarashi said this week the government must fix its finances to avoid a debt crisis that could trigger a “global depression.”