Forex market was generally quite muted last week. No major happenings as events that took place were mostly anticipated but generally safe haven flows supported the greenback, yen and the swissy. Euro was kept weak as outlook on the eurozone looked negative.
Following Ireland's downgrade, Portugal's rating was downgraded one notch by Fitch. There were rumors of further downgrade of the european nations, with Spain next on list. Some news to beef up the euro - 1)S&P reaffirmed France's rating. 2)It was also reported China stood ready to purchase significant amount of Portugal's sovereign debt to support the euro. Such news did not help much though. Euro remained weak and closed at 1.3122, down 0.5% w-o-w. Against the swissy, euro marked the worst loss, reaching a record low 1.24712 on 22-Dec.
China announced a further rate hike during the weekend, raising the benchmark interest rate by another 25bps to rein in inflation. Market did not react much on this but risk aversion may come in as asian session opens tomorrow.
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