Traders who spent the morning selling the rumor that Standard & Poor's would soon downgrade the sovereign credit of France are now buying the news, pushing the battered euro off its intraday lows.
French President Nicolas Sarkozy has been told that France has lost its coveted AAA rating and is now a mere "AA" in the eyes of S&P.
The news had been anticipated since November , when a pre-written downgrade notice "accidentally" transmitted through the S&P network.
At the time, a friend who works at the rating agency explained the accident to me as a problem with their technology, but it is now clear that the notice was written in advance and held until today.
Customarily, S&P gives sovereign issuers at least 24 hours notice before issuing a formal downgrade.
The euro, which was down over 1% in morning trading, has recovered from the worst of its losses and is now down 0.40% against the dollar.
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