The debt worries have come again containing the current market sentiment but this time by Moody's warning about the triple A crediting countries which supported the Japanese yen and the greenback across the broad weighing negatively on the risk appetite in the beginning of this week with surprising release of US Jan net long term of TIC flows at 19.1b$ and they were expected to be 50b$ from 63.3b$ in December while the total net TIC flows of January came at -33.4b$ from 60.9b$ in December.

The debt worries have started to come into the spot of the markets attention this year after it had been possessed by the governmental rescue plans and injecting liquidity in the recent 2 years in the nerves of the economy by increasing its stimulating spending, tax cuts and easing the monetary policies for spurring the investment and moving the economy out of the recession after the credit crisis, it's now focusing on the cost of these rescue plans which has accumulated in the countries debts and the negative impact on the its creditability amid the current slow economic recovery specially in Europe which is suffering both of these problems. The growth is at a very slow pace comparing with US and the debt is still accumulating in several countries like Greece, Spain and Portugal and deficit to GDP ratio average has become at 6% while it should be below  3% on Maastricht treaty of the Euro area. In the recent few days the talking has increased again about accompanied European rescue plan for bailing out Greece but again the market has disappointed by Austrian financial minister downplaying the Greek efforts impact on its debt which effected negatively on the single currency which has been hit recently by its countries credit lowering rating and the situation in Greece and its governmental tries to get the European acceptance by holding back its current unsustainable deficit which has become 12% of the Greek GDP though cutting spending and taxes reforms which caused rising of the streets riots.

The single currency could close finally above 1.37 last week versus the greenback underpinned by this talking and the increased risk appetite after strong US retails sales of February were expected to be up monthly excluding the auto sales by .2% and it came at .8% and the better than expected Jan industrial productions of EU which were expected to be up monthly by .7% and came at 1.7% after a drop in December by 1.7% and they were expected to be down yearly by 1.9% from falling in December by 5% but they came surprising up by 1.4% but the market has shrugged off the possibility of a joint European plan again pushing it below 1.37.

Best wishes

FX Consultant
Walid Salah El Din
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