Let us look at Europe first as Spain's long-term credit rating was downgrading by Standard and Poor's (S&P) to BBB+ from A. This comes as the ratings agency is concerned over Spain's increasing budget woes. S&P feels its debt problems will worsen due to the weakened economy. The S&P also assigned a negative outlook. This means another downgrade might happen in the future. We should note that this downgrade was not a surprise as Spain's credit rating was slashed 2 notches in February as well due to the country's economic outlook. Much has happened so far this month that should have derailed the US dollar and the Euro. We have had a weaker GDP reading and Spain suffered a downgrade. Still the US dollar held up above a key 78.50 level. Read more about the US Economy at www.livetradingnews.com Back in the US, the Q1 GDP numbers missed the mark coming in at a tepid 2.2% growth rate. This came as business are cutting back on investments but a stronger demand for automobiles helped to soften the blow. The print was below the 3% reading for Q4 and below the expected 2.5% growth rate. The dollar has always been the world's primary reserve currency. This tends to make the Dollar a strong performer when fear and economic woes drive investors into a liquid and trustworthy instrument. However, things must be dire for investors wanting to invest in the low return of a heavily manipulated US Treasuries market, which is the benchmark safety instrument for the region.
Things have been very quiet as of late. Is it changing? The UK, along with the US slowdown, has come into a double dip recession. China's own economic boom is slowing down as well. Forecasts are even calling for the EU to enter another recession. To complicate matters, issues are strengthened with the ever present Euro area debt crisis. Even China has its own lending bubble and we see Switzerland and Japan increasing efforts to curb their own debt loads. With this said, the world is tending to a big debt problem and all eyes will be watching the Fed and other governments as the battle this burgeoning issue.