France May See Rating Downgrade By The End Of The Day

The euro looked likely to finish the week above $1.24 as following Thursday’s lackluster European Central Bank loan offering. The common currency traded at $1.2435 at 9:00 GMT on Friday morning as investors kept an eye on the region’s financials for any further indications that the bank will be forced to print more money in early 2015.

Investors are becoming more and more convinced that the European Central Bank will ease early next year as falling oil prices look likely to drag the region’s inflation down as well. Later in the day, traders will be watching for the region’s industrial production and unemployment data, which are both expected to add to the case for more easing.

On Thursday, the European Central Bank offered its second round of cheap loans to the region’s banks, but Reuters reported that interest was slim. Without a high demand for the near zero-cost loans, the ECB will find it difficult to expand its balance sheet to the levels necessary to increase consumer prices. Thursday’s loan offerings served as another reason the bank will eventually have to resort to a wide-scale quantitative easing program.

Meanwhile, markets are betting that Fitch will slash France’s rating by the end of the day on Friday. A downgrade for France would be another disappointment for the region, especially after Italy’s rating was trimmed last week by Standard & Poor’s. In October, Fitch reduced its outlook to negative on the nation’s rating and now analysts say they are almost certain the agency will cut its AA rating on Friday.  Fitch will likely cite the country’s lack of commitment to making the necessary economic reforms in order to grow the economy as reason for the cut.