Moody’s cuts Japanese rating

Despite the rebound on Wall Street and slightly better sentiment on the financial markets, Asia stocks slide, because of Moody’s decision to downgrade Japanese credit rating. However, the decision is not highly surprising, taking into account the fact that in May the agency changed the outlook to negative. In May the agency explained that it is the result of concerns about the prospects for the Japanese economy and slow progress in reducing public debt. Currently, Moody's notes against the high budget deficit, growing public debt and the political situation that makes it impossible to introduce a serious economic reforms.

European economy

On Tuesday the mood was also spoiled by the publication of ZEW institute's index for the German economy. In August, it fell to -37.6 pts from -15.1 pts a month earlier and had the lowest value since December 2008. The data was much worse than forecasts. The market consensus stood at -25 pts. After such a strong drop in ZEW index, investors are anxiously waiting for today's publication- the Munich Ifo Institute Index. The data will be published at 10.00 CET.  The markets expect the fall to 111 pts from 112,9 pts in July. The better than expected data may suggest that the economic situation is not so bad.

Gold slightly down

Although today's morning is marked by increases of gold prices, but the chances of new records in coming days are much smaller than yesterday. The profit taking is likely to continue. Not only because of the high prices, but also because of the favorable technical situation on the daily chart of gold. A yesterday’s long black candlestick and the one drawn on Monday form a bear market formation which may even indicate a change in trend. The importance of this formation confirms the proximity of resistance at the level of 1930 USD.

Events to watch

In the calendar, apart from the Ifo institute's index, the other key events are: the June industrial orders in the euro area (forecast: 0.5% m/m) and  data on orders for durable goods in the U.S. in July (forecast: 1.9% m/m).

Paweł Kordala

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