Japan downgraded, sparks USD rout: Sighting heightened uncertainty over the achievability of fiscal deficit reduction goals, the timing and effectiveness of...

Japan downgraded, sparks USD rout: Sighting heightened uncertainty over the achievability of fiscal deficit reduction goals, the timing and effectiveness of growth enhancing policy measures and increased risk of rising JGB yields and reduced debt affordability over the medium term, ratings agency Moody's downgraded Japan's sovereign rating from Aa3 to A1 overnight. While the group slapped a stable ratings outlook on the nation following the move, something that suggests little chance of a further downgrade in the short-term, at A1 it now sits only 6 rungs above the level that separates investment grade from junk bond status. Despite being a negative for Japan, hence the Japanese Yen, the latter actually rallied following the decision sending the USD sharply lower. Given the oversold nature of many commodities at present and the fact they're USD-denominated, almost perversely, the downgrade essentially acted as a bullish circuit-breaker for commodities during the course of overnight trade. (VIEW LINK)