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Summary
The Day So Far…
No I did not misquote the 1986 classic “Big Trouble in little China”, rather I refer to my feelings as to what the news overnight means for financial markets. Moody’s downgraded the sovereign rating of China for the first time since 1989 due to the growing amount of debt being accumulated in order to maintain the current pace of economic growth. Although the local equity markets and AUD fell overnight the currency has since rebounded and the read across into the European open has been muted. To me this news is unsurprising as the China of 1989 compared to the China in 2017 is a starkly different beast and so a change was warranted sooner or later. Secondly, in the context of the other rating agencies the move to Aa3 at Moody’s puts them on par with where Fitch is already and just one notch below S&P, so in reality the downgrade is not massive news.
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Editors’ Picks
EUR/USD recovers modestly, stays below 1.1900
EUR/USD gains traction and edges higher toward 1.1900 in the second half of the day on Thursday. The US Dollar struggles to benefit from the upbeat employment data following an initial positive reaction, allowing the pair to find a foothold.
GBP/USD holds above 1.3600 after UK data dump
GBP/USD clings to moderate gains above 1.3600 following the release of the UK Q4 preliminary GDP, which showed that the UK economy expanded at an annual pave of 1% in Q4. Meanwhile, the improving risk mood causes the USD to lose interest and helps the pair edge higher.
Gold retreats from February highs, holds above $5,000
Gold corrects lower after touching a fresh February-high above $5,100 but manages to hold comfortably above $5,000. The positive shift seen in risk mood limits the safe-haven precious metal's strength, while the trading action remains choppy ahead of Friday's key US inflation data.
LayerZero Price Forecast: ZRO steadies as markets digest Zero blockchain announcement
LayerZero (ZRO) trades above $2.00 at press time on Thursday, holding steady after a 17% rebound the previous day, which aligned with the public announcement of the Zero blockchain and Cathie Wood joining the advisory board.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
Here is what you need to know on Thursday, February 12:
The US Dollar stays resilient against its rivals in the second half of the week, supported by the upbeat labor market data for January. The US economic calendar will feature weekly Initial Jobless Claims and January Existing Home Sales data on Thursday.