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Big risk off move following the Spanish bank downgrades and Fitch lowered the rating of Greece

Friday, May 18, 2012 3:38 AM GMT

Good Morning ,

- Big risk off move following the Spanish bank downgrades and Fitch lowered
as well the rating of Greece. EMG- and commodity currencies are all weaker.
AUDUSD dropped below 0.9800 or lost more than 1.5 % just today or AUDJPY
erased today all the gains of this year. EURUSD remains stubbornly solid
(low 1.2654), thanks to unwinding of short EUR-positions.

- Stocks: Nikkei -2.94 %, Han Seng -2.79 %, Shanghai Composite -1.19 %,
Dow Jones -1.24 %, S+P500 -1.51 %

- Greece's credit rating was downgraded one level by Fitch Ratings on concerns
the country won't be able to muster the political support needed to sustain
its membership in the euro area as leaders began campaigning ahead of the
second national vote in six weeks. Greece was cut to CCC from B-, according
to an e-mailed statement late yesterday in London. The country's ceiling was
revised to B-, Fitch said in the statement.

- Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain's biggest
lenders, were cut three levels by Moody's Investors Service, which cited a
recession and mounting loan losses in downgrading 16 of the nation's banks.
Nine firms were cut three notches and seven were kept on review for further
reductions, Moody's said yesterday in a statement.

- British Prime Minister David Cameron will tell leaders of some of the world's
biggest economies on Friday that they must work together to stop the economic
crisis afflicting the euro zone from spreading worldwide.

- Reuters: It is not only Greeks who are worried about their savings. Data
shows depositors have also taken flight from banks in Belgium, France and
Italy. And on Thursday, Spain's Bankia was reported to have seen more than 1
billion euros drained by its customers in the past week.

- Japanese Finance Minister Jun Azumi said on Friday that he was monitoring
currency moves with extra care and was prepared to respond as appropriate.
Azumi said speculators were over-reacting after the yen rose to a three-month
high versus the dollar and the euro. He said he has confirmed with Group of
Seven countries several times in the past that excessive currency moves are
undesirable.

- The Japanese government raised its view of the economy in May for the first
time in nine months due to strength in exports and consumer spending, but it
stressed that downside risks remain amid the strong yen and the euro-zone
debt crisis.

- China may see about 7.5% growth year on year in gross domestic product in 2Q,
China Securities Journal reports, citing a report from the State Information
Center's economic forecasting department.

- China MNI business flash business sentiment eased to 52.99 in May from 56.04
in April.

- South Korea's finance minister said the won's on Friday were excessive, as
the local currency hit five-month lows.

- Federal Reserve Bank of St. Louis President James Bullard said economic
reports this year have been stronger than forecast and he expects the central
bank to raise its target rate by 2013.

- Former European Central Bank President Jean-Claude Trichet suggested
countries be stripped of their economic sovereignty when their inability to
implement measures recommended by European authorities put other nations
in the euro region at risk.

- JPMorgan Chase & Co.'s loss from derivatives trading may widen to $5 billion,
the Wall Street Journal reported.

- n/a G8 Meeting in Camp David starts (18/19 May)
- 1430 US Revisions Factory Orders
- 1430 US Revisions Durable Goods Benchmarks
- 0800 Germany PPI Apr
- 1000 Italy Industrial Orders Mar
- 1000 Italy Industrial Sales Mar
- n/a Spain Trade Balance Mar
- 1100 ECB Gonzalez Paramo
- 1430 Canada PPI Apr

  (CET)

Have a nice weekend !

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