Tuesday morning saw the downgrade of several euro zone nations by Moody's Investor Service. Italy, Spain, Portugal, Slovenia, Slovakia, and Malta all saw their ratings downgraded in the face of growing uncertainty about the euro zone's ability to effectively solve its debt crisis.
Italy was downgraded from A3 to A2, Spain from A3 to A1, and Portugal from Ba3 to Ba2. According to Moody's, these countries continue to perpetuate a negative economic forecast despite efforts made to address debt issues. Slovakia, Slovenia, and Malta also had their ratings downgraded; however, news of these downgrades will have less of an impact on Forex trading. In a surprise move, Moody's also issued a warning to the UK and France that their ratings were also in danger of being downgraded.
The effects of these ratings have already been witnessed in the Forex market this morning. The USD has gained on several fronts, including against the euro, Swiss Franc, and Japanese Yen. Traders would be advised to keep an eye on how this trend develops throughout the day.