The US Federal Reserve chairman Ben Bernanke warned that the country’s coveted AAA credit rating would be at risk if the borrowing limit increase was not approved by congress. It is so severe that should an agreement not be reached by August the USA may start to default on its obligations.
China’s inflation hit the highest level in 34 months even with the government trying to curb rising prices. Food prices have continued to be the biggest factor at 11.7% Xu Biao of China Merchants Bank said “For now, it seems certain that China’s CPI will hit 6% in June.”
Following the downgrading of Greece’s credit rating to the lowest possible of any country (CCC), Moody’s have said that they may also downgrade the French Banks Credit Agricole, BNP Paribas and Societe Generale because of their exposure to the Greek debt.
A leaked document showed that the proposed second bail-out for Greece would dominate the upcoming European council meeting next week. It also indicated EU Commissioners have a “profound sense of foreboding” about Greece and the future of the Eurozone.
The Indian central bank raised interest rates once again as it continues to fight rising prices in the country. Borrowing costs increased a further 25 base points from 7.25% to 7.5% the tenth time they have increased rates since March 2010.
Douglas Palmer
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”
