2012.10.1705:14:00UTC+00Euro Mixed In Early Deals; Moody's Retains Spanish Investment Rating

The euro showed mixed performance against its major counterparts in early deals on Wednesday. While the common currency edged higher against the Swiss franc, it halted early Asian session's rally against the rest of majors.

The European shared currency rose in the Asian session after the rating agency Moody's Investors Service left its Spanish sovereign rating unchanged at investment grade, but with a 'negative' outlook.

For today's rating decision, the rating agency cited a number of positive developments since June, including the European Central Bank's announcement of the bond-purchase program and evidence of the Spanish government's continued commitment to implement the fiscal and structural reform measures.

Moody's has a Baa3 rating on Spanish government bonds. The ratings agency found that the risk of the Spanish sovereign losing market access has been materially reduced by the willingness of the ECB to undertake outright purchases of Spanish government bonds to contain their price volatility.

Last week, rating agency Standard & Poor's downgraded the country's rating by two notches to BBB-, the lowest investment grade possible. S&P had highlighted the mounting risks to public finances from rising economic and political pressures, while warning of a possible further downgrade.

Reports showed the Spanish government is inching closer to officially request a European bailout also lifted investor sentiment to some extent.

The euro continued to stay above the key 1.21 mark for the second straight session on Wednesday, rising to a 1-week high of 1.2116 around 3:35 am ET. The euro-franc pair is expected to hold the bullish trend and a likely resistance level of 1.2120 is visible for the currency cross in the near-term.

The common currency that advanced to a fresh 4-month high of 0.8140 against the pound in the Asian session showed a listless performance in the succeeding trading hours. The euro-pound pair has been trading in a narrow range of 0.8131 and 0.8117 since its Asian session peak.

The euro that advanced to a monthly high of 1.3125 against the US dollar in the Asian session slipped back to below the 1.31 area in early deals on Wednesday. An ascending triangle in the 2-hour chart has broken and the pair has gained almost 80-pips of gains so far today.

The single currency also eased from a 4-week high of 103.54 against the yen in early London/Europe deals Wednesday. The pair erased some of its gains to reach a low of 102.93 ahead of the session but has recovered some of its losses just after commencing the session.

Looking ahead, the Bank of England minutes of its latest monetary policy meeting, the UK jobless claims for September, Swiss ZEW survey results for October and the eurozone construction output for August are expected in the session.

The U.S. housing starts and building permits for September are the key economic data to watch in the North American session.