Spanish Banks are Next in Line as Moody’s Downgrades 26 Italian Banks

Forex Daily Review: Spanish Banks are Next in Line as Moody’s Downgrades 26 Italian Banks

Moody's explains the adverse operating conditions; Italy's return to recession, mounting asset-quality challenges, weakened net profits as well as restricted access to market funding are the the main reasons for the rating cut.
26 Italian Banks Downgraded by Moody's*

Banca Carige S.p.A.
Banca della Marca Credito Cooperativo
Banca delle Marche S.p.A.
Banca Monte dei Paschi di Siena S.p.A.
Banca Monte dei Paschi di Siena, London
MPS Capital Trust I
Monte Paschi Ireland Limited
MPS Capital Services
Banca Padovana Credito Cooperativo
Banca Popolare Alto Adige-Suedtir.Volksb
Banca Popolare di Cividale ScpA
Banca Popolare di Marostica Scpaarl
Banca Popolare di Milano
Banca Popolare di Spoleto
Banca Sella Holding
BancApulia S.p.A.
Banco Popolare Societa Cooperativa
Banca Italease S.p.A.
Banca Popolare di Lodi Investor Trust III
Banco Popolare Luxembourg S.A.
Banco Popolare Societa Cooperativa, London Br
Cassa di Risp.di Bolzano-Sudtiroler Sparkasse
Cassa di Risparmio della Provincia di Chieti
Cassa di Risparmio di Cesena SpA
Cassa di Risparmio di Ferrara
Credito Emiliano SpA
Credem International (Lux) S.A.
Credito Valtellinese
Iccrea BancaImpresa S.p.A.
Intesa Sanpaolo SpA
Banca CR Firenze S.p.A.
Banca IMI SpA
Banca Monte Parma
Intesa Sanpaolo SpA Hong Kong Branch
Intesa Sanpaolo Bank Ireland plc
Intesa Funding LLC
Intesa Bank Ireland p.l.c.
Intesa Sanpaolo SpA, NY Branch
Societe Europeenne de Banque SA
MedioCredito Trentino-Alto Adige
UniCredit SpA
UniCredit Int'l Bank (Luxembourg) S.A.
UniCredit Luxembourg Finance S.A.
UniCredito Italiano Capital Trust III
UniCredito Italiano Capital Trust IV
UniCredito Italiano Delaware, Inc.
UniCredit Bank Ireland p.l.c.
Unicredito SpA, New York Branch
Unione di Banche Italiane S.c.p.A.
Banca Lombarda Preferred Securities Trust
Banca Popolare di Bergamo Capital Trust
UBI Banca International S.A.

*Source: Moody's Investor Service

Moody's threatened Credit Immobilier de France (CIF) with a huge 4 notch downgrade as auditors refuse to sign off on the 2011 accounts.

Next on Moody's hit-list are Spanish banks, Austrian banks, Swedish banks, Norwegian banks, German banks, Danish banks, Finnish banks, firms with global capital market operations, French banks, UK banks, Luxembourg banks, Belgian banks and Dutch banks. The reviews will be published in May and will end by June 2012.
Euro Zone GDP

The German Prelim Gross Domestic Product (GDP) rebounded in April from -0.2% to +0.5% despite analysts' forecast. EUR/USD gained on the back of the positive data, currently trading at 1.2858. German ZEW Economic Sentiment at 09:00am GMT will be given extra attention by forex traders to evaluate whether the German economy is indeed in recovery which could add to Euro-dollar gains.

EU commission Euro Zone forecast:

EU economy currently in a 'mild recession'
Eurozone unemployment to stay around 11% through 2013
Recovery in sight but economic situation fragile.
Spain GDP to fall 1.8% in 2012, 0.3% in 2013
Spain 2012 deficit 6.4%/ GDP, above 5.8% target
Spain 2013 deficit seen 6.3%/ GDP (vs. 3% Government target)
Greece GDP seen down 4.7% in 2012, flat in 2013
Greece 2012 deficit 7.3%/ GDP, 2013 deficit 8.4%
Greece 2012 public debt 160.6%/gdp, 2013 168%
Germany to grow +0.7% in 2012, +1.7% in 2013
Germany hicp seen at +2.3% in 2012, +1.8% in 2013

Greece's Debt Management Agency (PDMA) is planning to sell a new 13-week treasury bill (T-bill) maturing 17 August. Greek T-bill yields could surge amidst Moody's and Fitch, a warning to investors that risk for an exit of Greece from the Euro Zone has increased. Greece is also due to release the provisional 2012 GDP data from the first quarter that will reflect the austerity measures effect. Auction results are due to be announced around 09:15am GMT.

Reversed head-and-shoulders are forming on CAD/JPY 4hr chart. Although a clear signal has not been given at the time of this writing main resistance is seen at 80.19 (55 moving average, purple line). Should the price break above the 55MA, gains may extend toward 200MA (pink line), currently at 81.42.

Failure to break above the 55MA may result in a temporary weakness towards 79.30.