France - Chopped on Possible Loss of AAA Credit Rating

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Speculation that France faces the risk of losing its AAA credit rating has spooked already jittery euro currency traders. InvestTechFX reports that the euro continues to be under assault as one euro zone country after another finds its borrowing costs escalating. France already finds itself in the position of paying more to borrow than any other country with an AAA credit rating, with the exception of two much smaller economies, Australia and Austria. Forex currency exchange traders must be nimble to react to spikes and troughs in the euro’s value and keep trading costs to an absolute minimum.

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France, this past Monday, experienced a significant percentage increase in its borrowing costs to a level almost double that of Germany. One French economist and adviser to French President Nicolas Sarkozy, Jacque Attali, commented in the newspaper La Tribune saying, “Let’s not delude ourselves: In the markets, French debt is already not AAA.” Since France, along with Germany, are the main factors of the euro zone stability fund arranged to deal with Europe’s debt crisis, InvestTechFX reports that a change in France’s credit rating could threaten the entire plan.

Investor concern over French debt load and annual budget deficit are mainly responsible for higher yields on French bonds. While the French government steadfastly maintains that it has the ability to repay its debts, the French budget deficit is currently more than double the limit imposed in the 17 nation euro zone.

An analyst with Assya Compagnie Financiere, a French private equity and venture capital firm, Marc Touati, had this to say about France’s AAA credit rating: “The question is not if France will be downgraded the question is to know when France will be downgraded.”

A preview of the implications of downgraded credit was presented to France last Thursday when an alert issued by Standard & Poor’s went out to some clients that France’s credit rating had already been reduced. The alert had been issued in error, but in the 1 ½ hours’ time it took for Standard & Poor’s to correct their mistake, already rising French bond yields experienced a significant jump.

To further fuel the dismal outlook for the euro, no less an authority than billionaire investor Warren Buffett said that while he believes the recent leadership changes in Greece and Italy should bolster the euro, investors are losing confidence in the currency because the euro zone lacks anything resembling the US Federal Reserve to take measures to revive EU business. Forex currency exchange traders have responded by continuing to put down side pressure on the euro.

While it appears that the euro will continue to move lower in value compared to other major currencies, the time and the rate of this move is still very much up in the air. This is what makes FX trading challenging. The value of the currency never changes in a perfectly linear or predictable manner. If it did, Forex currency exchanges would not exist for the purpose of speculating on future currency values.
This is where the need for the low cost online Forex trading that a Forex ECN broker provides is most apparent. The euro versus the dollar has spent the majority of 2011 above where it opened for the year, but below the midway point between the high and low for the year. This lack of a clear-cut trend makes it imperative that the low, fixed spread trading available from a Forex ECN broker such as InvestTechFX is utilized to minimize trading costs and properly identify optimal trade entries and exits.

In addition to low trading costs, InvestTechFX also offers its clients the ability to trade on the world’s most widely adopted trading platform, MetaTrader. They also offer access to Forex currency exchange news, that when combined with the powerful technical capabilities of MetaTrader, supplies currency traders with the ability to combine fundamental and technical trading techniques in a way that is superior to concentrating on only one or the other method for arriving at trading decisions.

Online Forex traders who wish to learn more about how InvestTechFX’s cutting-edge technology and low trading costs can help them successfully navigate the Forex currency exchanges during the current period of political and economic turmoil can visit their website at http://www.investtechfx.com

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