France Downgraded by Moody, Euro Falls

Moody’s Investors Service downgraded the high-rated France down to a Aa1 today.

This announcement has been released by Moody today in result of their recent assessment of France.

“The outlook remains negative.” The report states.

It’s said that a team is only as strong as it’s weakest link. Is it possible that Spain, Italy, and Greece are pulling the whole Euro Zone down?

This decision precedes tomorrow’s critical Eurogroup meeting, where we could hear an official announcement of additional aid being sent to Greece.

The three dominating factors in this decision are found in Moody’s report:

“1.) France’s long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.

2.) France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.

3.) The predictability of France’s resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding. France’s exposure to peripheral Europe through its trade linkages and its banking system is disproportionately large, and its contingent obligations to support other euro area members have been increasing. Moreover, unlike other non-euro area sovereigns that carry similarly high ratings, France does not have access to a national central bank for the financing of its debt in the event of a market disruption.”

Read the rest of the report here: visit this link to see Moody’s report on France.

In the meantime, we could see further Euro bear action as investors move their funds over into safer territory like, the U.S. Dollar.

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