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The Euro extended its correction against other major currencies after S&P downgraded the
country's sovereign credit rating to Triple B Minus, from Triple B Plus, placing it much
closer to junk level.
In addition, the long term rating was also assigned a negative outlook.
The rating agency noted that the outlook "reflects our view of the significant risks to Spain's
economic growth and budgetary performance, and the lack of a clear direction in euro-zone
policy".
And, the "deepening economic recession is limiting the Spanish government's policy options".
It also noted that "the capacity of Spain's political institutions, both domestic and
multilateral, to deal with the severe challenges posed by the current economic and financial
crisis is declining".
Markets are expecting Moody's, to follow suit.
Shortly before S&P's announcement, French President Hollanday said at a joint press
conference with Spanish Prime Minister Rahoy that "France and Spain share the same concept
of what needs to be done".
Hollanday pledged to "move forward as much as possible" on issues that include creation
of the banking union and the role of the E-C-B in bank supervision.
Hollanday was optimistic that with these questions solved, there will be "different growth figures
than predicted".
Rahoy said he's confident that there will be "formulas so that Grease can respect its
commitments and so the others can take timely decisions that allow Grease to remain in the
euro".
The latest Beige Book survey by the Fed showed that the U-S economy 'expanded modestly',
compared with the reference 'expanded gradually' used in the August report.
While most districts showed modest growth, the New York District had 'a leveling off'
in economic activity, and Kansas City showed 'some slowing in the pace of growth'.
Overall, improvement was seen in the housing market and the automobile sector.
Consumption was 'generally flat to up slightly' while the manufacturing sector was 'somewhat
improved'.
The report appeared to be inline with Fed Chairman Ben Bernankey's earlier comments
that the pace of economic growth is insufficient to bring the employment conditions back to
normal.
The Australian dollar was lifted today by stronger than expected employment data.
The job market grew 14,500 in September, much better than the consensus of 5,100.
That also made up for August's revised 9,100 loss.
Unemployment rate, though, rose more than expected to 5.4%.
While the data showed that the labor market had remained resilient, it shouldn't reduce
much chance of further rate cuts from the Reserve Bank.
Elsewhere, Japan machine orders dropped 3.3% month on month in August, household confidence
dropped to 40.1 in September.
German C-P-I was finalized at 2% year on year in September.
The E-C-B will release the monthly bulletin in the European session.
In the U-S session: Canadian trade balance, new housing price index, and U-S trade balance,
jobless claims and import price index will be released.