The respite proved to be short-lived, with sentiment quickly turning defensive once again as Euro Zone sovereign risk fears re-emerged amid a deluge of negative news-flow out of the currency bloc: S&P lowered its credit outlook for Italy to “negative”; Fitch cut its rating of Greece; and Spain’s ruling Socialist party suffered a defeat in local elections as the public lashed out at the budget cuts that had kept the region’s fourth-largest economy off crisis watch until now.Needless to say, traders now fear this is a sign of things to come, with a national-level electoral turnaround that undoes austerity in Spain or an outright rating cut in Italy threatening to unleash a crisis in a country too big to be rescued within the context of the EFSF bailout fund as it stands.
U.S Dollar Roars Back due to European Debt Crisis
The respite proved to be short-lived, with sentiment quickly turning defensive once again as Euro Zone sovereign risk fears re-emerged amid a deluge of negative news-flow out of the currency bloc: S&P lowered its credit outlook for Italy to “negative”; Fitch cut its rating of Greece; and Spain’s ruling Socialist party suffered a defeat in local elections as the public lashed out at the budget cuts that had kept the region’s fourth-largest economy off crisis watch until now.Needless to say, traders now fear this is a sign of things to come, with a national-level electoral turnaround that undoes austerity in Spain or an outright rating cut in Italy threatening to unleash a crisis in a country too big to be rescued within the context of the EFSF bailout fund as it stands.
