Asian session: The euro dropped
The euro dropped against the dollar and yen after Standard & Poor’s cut Italy’s credit rating, adding to concern Europe’s debt crisis will raise borrowing costs for the region’s largest economies.The rating for Italy, which has Europe’s second-largest debt load, was lowered to A from A+, S&P said yesterday in a statement. The firm said Italy’s net general government debt is the highest among A rated sovereigns, and now expects it to peak later and at a higher level than it previously anticipated.
The dollar gained most of its major peers before the Federal Reserve’s policy meeting today.
Australia’s currency rose as high as $1.0243 after the Reserve Bank of Australia released minutes of its most recent meeting saying the central bank is “well placed” under current policy settings.
EUR/USD: on asian session the pair fell, but restored later.
GBP/USD: on asian session the pair fell, but restored later. USD/JPY: the pair was under pressure. Canadian data at 1230GMT includes the release of the August Leading indicator and July Wholesale sales. US data released at 1230GMT includes August housing starts and building permits. The pace of housing starts is expected to slow further to a 580,000 annual rate after falling in the previous month. Weak new home sales and the high inventory level of unsold existing homes continue to restrain new home building. At 1300GMT, the IMF releases its World Economic Outlook, with revised economic forecasts, with many expecting a downgrade of GDP forecasts. The FOMC begins its two-day monetary policy meeting, a meeting expended from 1-day to 2, for the members to explore further exceptional measures available to the Fed.