Yen Gains After Moody’s Downgrades European Countries

The Japanese yen gained today after Moody’s Investor Service downgraded credit ratings of several countries, including Italy, Spain and Portugal. This action hurt market sentiment that was positive after the good news from Greece.
Moody’s cut ratings of several European countries yesterday. The rating agency reduced Spain to A3 from A1, Italy to A3 from A2 and Portugal to Ba3 from Ba2. Moody’s also changed outlook to negative for France, Austria and the United Kingdom.
The agency named such reasons for its decision:

– The uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis.

 — Europe’s increasingly weak macroeconomic prospects, which threaten the implementation of domestic austerity programmes and the structural reforms that are needed to promote competitiveness.

 — The impact that Moody’s believes these factors will continue to have on market confidence, which is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks.

USD/JPY traded at 77.55 as of 00:48 GMT today after opening at 77.57 and reaching the daily low of 77.35. EUR/JPY fell from 102.27 to 102.06 and GBP/JPY slipped from 122.29 to 121.94.

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