S&P downgrade of Deutsche Bank..........>

EURO-DOLLAR: S&P downgrade of Deutsche Bank announced as European trade got

under way, initial reaction saw EUR/USD drop from around $1.1680 to a fresh

intraday low of $1.1666 (Asia $1.1677) before rate edged back to hold around

$1.1675. Rate had seen a high of $1.1706 in early Asia, as it extended its

recovery off its month-end fix low of $1.1641, though fell short of Thursday's

high of $1.1724. Italy risk rescinding as parties edge closer to forming a

government, but focus now switches over to Spain and potential no-confidence

vote in PM Rajoy. US Employment Report takes centre stage at 1230GMT, median NFP

seen at 190k, AHE 0.2%mm, 2.6%yy. Ahead of NFP, EZ Manufacturing PMI data due

for release with Spain first up at at 0715GMT. Peripheral yield spreads likely

to provide main directional influence in the European morning with UST yields

moving into focus at NFP release. Traders note the large option expiry at

$1.1700 for today's NY cut, size E4.66bn, with suggestions that rate could be

anchored close by ahead of run off.