EU Morning Report - S&P downgrades EFSF

The euro managed to produce positive results against its major counterparts as markets commenced the week trying to digest the eurozone mass downgrade by S&P. Nonetheless, the credit rating agency monopolized the newswires once again, when it announced its decision to downgrade eurozone’s bailout fund, the EFSF. Earlier, a senior official of S&P talking with Bloomberg TV shared his belief that Greece will default soon. EFSF CEO, Regling, responded to the S&P’s downgrade by pointing out the fund’s well-diversified investor base and also noted that the facility still enjoyed triple A rating from the two other major agencies. Meanwhile, France successfully completed a bond auction, with the 1-year yield actually dropping. Moody's announced it would maintain France's AAA rating until a broader eurozone reassessment that will take place within the first quarter of the year. Versus the US dollar, the single currency rose to 1.2666 from 1.2633. Against the Swiss franc, the euro rebounded to 1.2084 from 1.2068.

The US dollar depreciated against a basket of currencies on the observance of Martin Luther King Day bank holiday. Against the Canadian dollar, the US dollar dropped to 1.0177 from 1.0245. Versus the Japanese yen, the US dollar fell to at 76.76 from 77.06.

The Australian dollar advanced to 1.0312 from 1.0287 versus the US dollar. The British pound rose to 1.5322 from 1.5279 versus the US dollar, as inflation figures for December will be released later today.

Oil prices rose to 99.59 dollars a barrel from 98.75. Gold jumped to 1643.58 dollars an ounce from 1635.02. Silver moved up to 29.97 dollars an ounce from 29.69.