Ireland is a lightening rod for the currency markets, sometimes unfairly and inaccurately, but since when has accuracy ruled the markets? A threat by Moody's to cut Ireland's AAA status on Friday afternoon was one of the reasons for the euro trading lower, suggested some financial news wires. But other traders pointed out that poor ole Ireland had nothing to do it, it was more connected to comments by Jean Claude Trichet and a split in the ranks of the ECB.

Unfortunately, all bad news about Ireland these days is served up as bad news concerning the euro by those not so keen on the currency. Either way, expect Ireland to get caught up in euro/dollar background noise that tends to constantly envelope currency markets.

Earlier in the week, Nobel prize-winning economist Paul Krugman said Ireland will be the next Iceland.

Maybe he will be right in time, but the bond market does not quite see it that way. Bond prices were muted for Ireland last week, although yields were still elevated at 5.28%.

But spreads have been converging all across Europe since mid-Febuary when Germany said it would provide support for weaker European countries, if needed.

Credit default swaps, the bond insurance instruments, were down too at 216 basis points, way off their highs of 17 February, when they threatened to break through 400 basis point barrier.

This economy is in a real mess and overseas opinion is extremely hostile. The NTMA has another auction this week, this time around for longer dated Irish paper. The results will be highly important, even crucial.

But so far, despite scary declarations from Krugman and Co, the bond market is keeping faith with Ireland's borrowing chiefs. But for how long?