European session: the euro dropped from a five-month high against the yen

The euro dropped from a five-month high against the yen after Moody’s Investors Service cut the ratings of five Spanish regions and French industrial confidence fell to the lowest in more than three years.

Moody’s cut the rating of Catalonia by two steps to Ba3, and also lowered Extremadura, Andalucia, Castilla-La Mancha and Murcia. The company said in a statement yesterday the decision was “driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves.” A week ago, Moody’s kept Spain’s sovereign rating at Baa3, the lowest investment grade.

The Spanish government told the EU its budget deficit in 2012 will be 7.3 percent of gross domestic product, exceeding a target of 6.3 percent, El Confidencial reported, citing a Spanish report. An index of sentiment among French factory executives fell to 85 in October, the lowest since August 2009, from 90 last month, the statistics office Insee said in Paris.

The 17-nation currency weakened for the third time in four days versus the dollar as Spanish newspaper El Confidencial said the government told the European Union it will miss its budget deficit target this year.

The yen fell past 80 per dollar for the first time in three months as signs Japan’s economy is closer to contraction spurred bets the central bank will boost stimulus. The yen earlier dropped against the dollar as Economy Minister Seiji Maehara, who has been calling for more action from the central bank, said today he may attend the Bank of Japan’s next meeting on Oct. 30 if his schedule permits.

EUR / USD: during the European session the pair fell to a new low of $ 1.2997

GBP / USD: during the European session the pair fell to a new low of $ 1.5977

USD / JPY: during the European session, the pair rose to Y79.95

At 12:30 GMT in Canada will change in the volume of retail sales, including excluding auto sales for August. At 13:00 GMT we will know the decision of the Bank of Canada Interest Rate will be done the accompanying statement of the Bank of Canada. At 14:00 GMT will Eurozone consumer confidence indicator for October. At 20:30 GMT the U.S.will publish the change in the volume of crude oil, according to API.