The euro posted a solid day against both sterling and the US dollar yesterday.
Moody’s opted to leave Italy’s credit rating unchanged, while updating its outlook on the county from negative to stable. This prompted a rally in its sovereign bonds, which previously came with a hefty risk premium compared to other nations.
The gap between the interest paid on 10-year Italian bonds and on German bonds, for instance, has now fallen to 1.7% from over 2% last week. Some feared that a downgrade from Moody’s could see the differential move as high as 2.5%, and this result will take some fiscal pressure off Rome.
EUR/USD: the past year
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