The Japanese yen strengthened against the US dollar throughout the day as the threat from all three major ratings agencies soured risk appetite.
In the past week Standard & Poor's warned of a possible downgrade of 15 eurozone countries shortly after the EU summit, while Moody's said last night it intends to review the ratings of all 27 EU states in the first quarter of 2012. Fitch, on the other hand, was less aggressive, but did warn that the pressure on EU member state ratings had risen after last week's EU summit had failed to announce a comprehensive solution to the debt crisis. With the mass downgrade from S&P expected this week, and the threat of France being downgraded by two notches, investors are moving into the perceived safety of the Japanese yen. Separately, US data released this afternoon failed to have any impact on the dollar/yen trading pair.
US retail sales data came in lower than expected at 0.2% in November after a gain of 0.6% in October. Still to come later this evening at 7.15pm (London time) is the Fed’s FOMC meeting where it is widely expected to leave its interest rate at 0.25%.