ESM Downgraded But EUR Still Strong

ESM Downgraded But EUR Still Strong

The euro (EUR) is rising against most of its major counterparts, even as Moody's cut the AAA rating of the European Stability Mechanism (ESM). Early in the Asian session, China released a slightly stronger manufacturing PMI confirming that the nation is continuing its recovery. There has been no breakthrough regarding the 'fiscal cliff' situation in the US and every day spent without any development is going to hurt market sentiment more and more.

This has traditionally been a strong month for equities as shown by the S&P 500 (tracked by the US 500 (SPI) rising 16 times in the past 20 years during the month of December.

The euro (EUR) is again trading above 1.30 against the US dollar (USD). This is the 5th time the single currency is trying this move in the past 7 trading days, and this time it has recorded a higher high at 1.3046.

OIL rebounded off its 87.00 US dollars (USD) a barrel support level and now trades just below the 89.00 figure. A break above that level could pave the way for higher highs.

The US dollar (USD) is falling against the Japanese yen (JPY) and the pair now lies just above the 82.00 psychological level. It will be interesting to see whether the greenback will pull a rebound.