After the EUR/USD jump to 1.2319 on Hollande’s pro-euro comments, the pair quickly retraced back below 1.2300 psychological level to reach as low as 1.2270 on comments from Germany. CNBC reported that Bundesbank wants ECB to focus on price stability and Bloomberg reported that the German Finance Minister said that there is no talk about the ESM banking license.
“The larger frames keep signaling a downtrend as fluctuations from the last days drew a consolidation zone between 1.2230-1.2330”, wrote Deltastock.com analyst Stoyan Mihaylov, pointing to a trend reversal if it breaks above 1.2400.
Schäuble says no need to give ESM banking license; Nain secret talks
German finance ministry Wolfgang Schäuble has said that he doesn't see the necessity to provide ESM with banking license, rejecting rumours on talks with Mario Draghi and Ewald Nowotny on any kind of banking license for the ESM.
Schäuble remains opposed to ESM bank license. At the same time, German savings bank group DSGV has rejected the idea to give banking license for the ESm too. Nowotny said that ECB was considering a plan to give a banking license to the European Stability Mechanism last week.
Bundesbank spokesman also said that the ECB was not discussing this plan. The German central bank believes monetary policy needs to keep focused on its mandate of price stability.
Countries members in problems should remain working on fiscal instruments to solved its problems said a Bundesbank source cited by CNBC.
Moody's cuts UK growth forecast
Moody's Investors Service cut its UK gross domestic product forecast on Tuesday, saying the UK economic and fiscal outlook have weakened in the wake of the ongoing eurozone crisis.
In a regular review published after the UK reported a 0.7% fall in Q2 GDP last week, Moody's lowered its GDP growth forecast to 0.4% for this year and 1.8% for 2013. However, the agency did not modify its rating credit nor its outlook, which remains negative, for the UK.
"The U.K.'s Aaa sovereign rating continues to be characterized by a large, diversified and highly competitive economy, a particularly flexible labor market, and a banking sector that compares favorably to peers in the euro area," Moody's said. "The negative outlook in part reflects concerns about the U.K.'s macroeconomic outlook for the next few years".
The UK could lose its triple A rating if Moody's thought its debt burden, deficit or funding costs were on a rising trend, the rating agency said. Moody's had moved the UK to a 'negative outlook' back in February.
Last week, Standard & Poor's, another rating agency, reaffirmed UK triple-A credit rating with a stable outlook, saying that the economy would improve toward the end of the year.