German PMI Data Reinforces Moody’s Outlook Downgrade

(eToro Blog) Earlier today, Germany, Luxembourg and the Netherlands all fell victim to Moody’s ratings wrath, with analysts there downgrading the outlook for the three top-rated Eurozone sovereigns from stable to negative. Moody’s analysts cite the strong possibility that the respective governments may have to cough up additional funds to help highly indebted neighbors such as Italy and Spain. Only Finland was left unscathed, and Moody’s in fact reaffirmed its Aaa rating and outlook as stable given that its exposure to Eurozone banks is limited as the country has its own system which is generally domestically-oriented.

The possibility that Greece might leave the Eurozone was also seen as an increased risk and weighed on the nations’ economic outlook, as analysts expect that their departure could trigger financial shocks which might be containable but only at a “very high cost.” For the three countries with a downgraded outlook, that price is already started to be paid;

Standard & Poor’s ratings agency gave high marks to Germany and left the outlook stable, but lowered Luxembourg’s, Finland’s and the Netherlands’s outlook to negative. Another ratings agency, Fitch, continues to give a stable outlook to all four of the Eurozone’s AAA-rated nations.

In other Eurozone news, Markit Economics released July’s PMI data for the Eurozone as a whole, as well as individually for economic drivers Germany and France. Germany’s PMI data for July failed to meet analysts’ expectations in either the services or manufacturing sector, with readings coming in at 49.7 and 43.3, respectively, against expectations of 50.0 and 45.3. In France, services PMI improved to 50.2 against expectations of a reading of 47.8, but manufacturing PMI deteriorated once again to 43.6 from 45.2 while analysts expected an improvement in the reading to 45.5.

For the European Monetary Union, the PMI composite reading for July was unchanged at 46.4 against expectations for a minimal improvement to 46.5. The services sector reading improved to 47.6 from 47.1 against expectations of a rise to 47.2, but the key manufacturing reading fell to 44.1 from 45.1, while analysts expected improvement in the reading to 45.3.

On OpenBook, the EUR/USD is trading at 1.2113 and sentiment is bullish as of this writing. OpenBook guru pyruss who is from Portugal has been profitably shorting the EUR/USD, with a pair of closed positions earning 4.50% and 2.50% in the last day.  The trader has a short position opened yesterday that is currently a small profit and which targets 1.202; several orders to sell have also been placed. In the past month, the guru’s 61.7% holding has earned a profit of 1.8% for himself and his 654 copiers.

OpenBook trader artinvestic from the Ukraine has only recently begun trading with OpenBook but already has an impressive record of five followers and five copiers, and a recorded profit last week of 14.8% and last month more than 300%. The trader’s entire portfolio consists of two currency pairs; the EUR/USD had an allocation of 86% with a gain of 31.2% for the past month, while the GBP/USD pair has a 14% allocation and 13.1% gain in the same period. Just within the past hour, the trader closed three short positions in the EUR/USD with gains which ranged from 1.56% to 15.25%.

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