Assets From Europe's Periphery

The Week Ahead Highlights Europe steps closer to the cliff edge Can the USD extend its rally? Bank of Japan may extend maturity of its bond buys Pricing in more QE from the Bank of England Europe steps closer to the cliff edge It was a pivotal week for the Eurozone after Greece announced that it was heading back to the polls after the top three parities failed to form a coalition government. So now Greece is leaderless, there is a caretaker government in place but it won't be able to enforce the austerity required to get the next tranche of bailout funds necessary for Greece to avoid running out of money in July. So as time runs out for Greece the European authorities have been clear: the upcoming election is a referendum on euro-membership. Either vote for pro bailout ...

The Draghi press conference didn't provide much in the way of direction for euro-based assets, yet EURUSD had one of its most volatile afternoons in days. The pair was 1.3100 when Draghi first started speaking. By the time he had finished EURUSD was up 70 points. The ECB didn't shift its stance and it didn't sound any more dovish than it did the last time it met so why the big move in the euro? The reason is down to rate differentials. Draghi didn't cause the rate differential between the currency bloc and the US to narrow as some had expected, which is euro positive in the short-term. In the long-term the ECB's policy stasis is euro negative especially as the sovereign debt crisis continues to rage and growth in Spain may get worse before it gets better. But the market is unlikely to ...

Global stocks and the euro slumped on Monday as disappointing euro zone private sector data and a Dutch budget crisis unnerved investors who scooped up perceived safe haven assets such as the dollar and U.S. Treasuries. With Dutch Prime Minister Mark Rutte tendering his cabinet's resignation in an impasse over budget cuts and dismal PMI figures from the euro zone, economists worried that the region's economy will stay in recession until the second half of the year. The April PMI reports for the euro zone, Germany and France, which are a guide to future activity, pointed to a much faster rate of economic contraction across the debt-laden region than had been expected. U.S. stocks fell sharply soon after the opening, with the Dow Jones industrial average .DJI, the Standard & ...

(Reuters) - Fears of a Europe-wide recession undermining political will to tackle the region's debt crisis gripped financial markets on Monday, sending shares and the single currency lower and driving demand for safe-haven assets. U.S. stocks were also poised to open lower on Wall Street. The economic outlook for Europe was hurt by poor flash Purchasing Manager's Indexes (PMIs) for April, which are a guide to future activity. The reports for the euro zone, Germany and France pointed to a much faster rate of economic contraction across the debt-laden region than had been expected. The gloomier view came as the Dutch government, a close ally to Germany in calling for tougher austerity measures to fight the crisis, was preparing to resign because of a crisis over budget cuts, according to ...

The Week Ahead Highlights QE or not QE? BOJ under pressure to ease No more support from the ECB Will the UK avoid a recession? Market Moves: Key Levels QE or not QE? The release of the FOMC minutes earlier this week and speeches by Fed officials have resulted in markets reducing their expectations of additional easing. However, today's disappointing jobs figures (120K in headline NFP vs. cons. 205K) have brought the speculation of more stimulus back into focus. To illustrate the extent of the negative surprise in the NFP print, the lowest estimate was for the addition of 175K payrolls out of the 80 economists surveyed by Bloomberg. QE3 chatter is making its rounds again in the markets and the US dollar has tumbled against most of the majors as heightened speculation ...

Extreme strain in the global economy has given way to something less hair-raising. So does the last investor in "safe-haven" gold, switch out the lights? After a storming start to 2012, bullion prices have lost some of their luster in recent weeks in line with a reassessment of global economic health. Jumbo-sized liquidity taps are off in Europe, while the jury is out on a further round of U.S. quantitative easing. U.S. data shows a slightly improved trajectory, with employment numbers and consumer credit growth highlighted in a key year for President Barack Obama. Treasury yields reflected that, breaking out of the doldrums and raising potential for tighter policy down the road. Given that backdrop it is no surprise that gold has retraced since touching a record $1,920.30 an ounce in ...

(Reuters) - Nervous investors kept the euro and stocks within narrow ranges on Thursday with interest focused on any signal from the European Central Bank's rate meeting about a policy easing and a Spanish bond sale that will test demand for Europe's debt. The single currency edged up 0.1 percent to $1.2714, after earlier bouncing off support at $1.2700. It had fallen as low as $1.26615 in New York on Wednesday. "There's a possibility the ECB will prepare the market for more rate cuts, and that should be negative for the euro," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich. Sterling fell to a three-month low versus the dollar of about $1.5288, dragged lower as investors took profits on short positions in the single currency. "We see testing times ahead ...

(Reuters) - Fiscal austerity in Europe demanded by markets and exacted by Germany as the price for saving the euro currency is taking its toll on the world economy. A global slowdown is spreading. Its severity rests largely upon whether financial markets remain confident that European Union leaders have delivered a euro-zone rescue plan with strong enough protections to support their bond markets and halt the spread of the sovereign debt crisis. If markets lose confidence, financial contagion will spread and further damage a vulnerable global economy. EU leaders agreed last week on deeper economic and fiscal union for euro zone members, but uncertainty is rampant over whether Europe has constructed firewalls strong enough to prevent further bond market sell-offs. Neither the European ...

(Reuters) - Gold inched lower on Thursday, along with equities, as concerns set in about whether European leaders would be able to come up with a concrete plan to contain the region's crippling debt crisis at a crucial summit on Friday. Hopes for a definitive plan to tackle the two-year-old euro zone debt crisis were feeble a day before the key EU summit, and expectations were dented further by pessimistic comments from a senior German official and new figures exposing deepening stress among Europe's banks. "A final solution out of Europe is highly unlikely," Jeremy Friesen, Commodity Strategist at Societe Generale in Hong Kong, said, but added that a total breakdown was also unlikely as central banks and finance ministries have shown the will to cooperate to fight the crisis which is ...