The euro inched lower on Wednesday after Moody's cut Spain's government debt rating by two notches, giving up some gains made on a report that France and Germany have reached a deal to bolster the euro zone's bailout fund.
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Gold prices held steady on Wednesday, after Moody's cut Spain's credit ratings, adding to uncertainties over whether European leaders would come up with a solution to the bloc's debt crisis at a meeting this weekend.
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Moody's Investors Service downgraded nine Portuguese banks on Friday due to increased asset risk as a result of the banks' holdings of Portuguese government debt and the sovereign downgrade of Portugal in July to Ba2 with a negative outlook .
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Moody's downgrade of three major banks on the premise the U.S. government will not stand behind them if they fail is "absurd," said Rochdale Securities analyst Dick Bove.
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Japanese Finance Minister Yoshihiko Noda said on Monday that market trust in the dollar and U.S. Treasurys has not wavered, signalling Tokyo's readiness to maintain its massive holdings of U.S. government bonds.
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Ratings agency Moody's has downgraded Greece's sovereign debt ratings by three notches to Ca with a developing outlook from Caa1 and said the country still faced serious medium term solvency challenges.
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The United States may lose its top-notch credit rating in the next few weeks if lawmakers fail to increase the country's debt ceiling, forcing the government to miss debt payments, Moody's Investors Service warned Wednesday.
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