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MARKET BRIEFING – LONDON OPEN 02.03.2016
Moody’s Investors Service has lowered the China’s government credit rating outlook from stable to negative, according to the agency’s publication this morning. The long-term primary unsecured debt rating and issuer’s other ratings are affirmed at ‘Aa3′.
The main factors to proceed with the revision of the forecast were the deterioration in the country’s financial performance and weak prospects for their further improvement, reflected in the increasing government debt and rising contingent liabilities.
The enduring fall in the country’s reserves due to the outflow of capital could likely deteriorate the country’s external strength. Even though the Chinese reserves still remain of a massive size of US$ 3.2 billion, they have decreased by US$ 762 billion since the peak in June 2014.
Investor’s uncertainty regarding the authorities’ ability to carry out reforms to address imbalances in the economy, according to the agency, also remains of concern.
Besides, the current fiscal and monetary policy provisions to reach 6.5% growth target are feared to slow the implementation of the necessary reforms, undermining the strength of the Chinese institutions, hence weakening their credibility.
Nonetheless, the current rating remained unchanged as a large size of the country contributes to its credit potency. ”Although GDP growth is slowing, it will remain markedly higher than most of China’s rating peers. The size of the buffers available to face current fiscal and capital outflow challenges allows for a gradual implementation of reform and therefore supports an affirmation of the rating at Aa3”, the agency reports.
EURUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.0950
Target 2: 1.0780
Projected range in ATR’s: 0.0088
Daily control level: 1.0860
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.4100
Target 2: 1.3800
Projected range in ATR’s: 0.0149
Daily control level: 1.3895
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 115.25
Target 2: 112.70
Projected range in ATR’s: 1.28
Daily control level: 112.00
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.0055
Target 2: 0.9885
Projected range in ATR’s: 0.0084
Daily control level: 0.9945
USDCAD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.3545
Target 2: 1.3270
Projected range in ATR’s: 0.0139
Daily control level: 1.3595
AUDUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.7255
Target 2: 0.7090
Projected range in ATR’s: 0.0084
Daily control level: 0.7115
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1255.00
Target 2: 1207.00
Projected range in ATR’s: 23.69
Daily control level: 1210.00
OIL
The intraday technical outlook
Trend 1 hour: Up
Target 1: 35.75
Target 2: 31.95
Projected range in ATR’s: 1.92
Daily control level: 33.30
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