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Ban On The Ecb FinancingTitle:
Will Greece Leave or Not?
We have heard conflicting information about Greece over the last 24 hours: first we heard that Greece was making plans to leave the Eurozone from former Prime Minister Papademos, which was denied. Then this morning reports from a German newspaper suggested that the ECB had set up a task force (tucked away in a bunker) working on the potential fallout from a Greek exit. It's likely that we will get these conflicting headlines between now and the end of the EU summit, which starts this evening at 1800 BST.
The markets' seemed to like the idea of an Avengers - style ECB working to combat the negative effects if Athens goes to the wall, and the euro bounced from its lowest level since 2010 earlier. But the real test will be the outcome of today's summit. So what should we expect and, ...
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European Market Update : 22/05/2012
Fitch cuts Japan's sovereign rating two notches
Economic Data
(JP) Japan Apr Supermarket Sales Y/Y: --1.9% v -2.4% prior
(FI) Finland Apr Unemployment Rate: 8.4% v 8.4%e
(DK) Denmark May Consumer Confidence Indicator: 0.4 v 0.6 prior
(ZA) South Africa Mar Leading Indicator: 134.5 v 134.4 prior
(NL) Netherlands May Consumer Confidence: -38 v -32 prior
(NO) Norway Q1 GDP Q/Q: 1.4% v 0.9%e; GDP Mainland Norway Q/Q: 1.1% v 0.9%e
(UK) Mar ONS UK House Prices Y/Y: -0.4% v +1.0% prior
(UK) Apr Public Finances (PSNCR): -£23.2B v -£6.0Be; Public Sector Net Borrowing: -£18.8B v -£22.8Be; PSNB ex Interventions: -£16.5B v -£20.0Be
(UK) Apr CPI M/M: 0.6% v 0.6%e; Y/Y: 3.0% v 3.1%e; Core CPI Y/Y: 2.1% v 2.0%e
(UK) Apr RPI M/M: 0.7% v 0.6%e; Y/Y: 3.5% v 3.4%e; Core RPI- Ex Mortgages Y/Y: 3.5% ...
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EUR/USD Rebound On Profit Taking
Sunrise Market Commentary
- Fixed Income: limited profit taking on core bond markets
- Global core bond markets fell prey to some profit taking in a thin, dull trading session. However, given the strength of equities, bond losses were very limited and occurred at the onset of trading. Today, the eco calendar remains thin and the profit taking might go some further in the run-up to tomorrow's informal EU Summit.
- Currencies EUR/USD rebound on profit taking
- The correction in EUR/USD was prolonged, but the euro gains were modest and mostly technical in nature. The UK inflation report is the eye-catcher of the day as it may influence sterling. However, overall trading might again be thin ahead of tomorrow's euro Summit.
The Sunrise Headlines
- US Equities rose for a second ...
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Dukascopy Afternoon Forex Overview : 05/17/2012
Dukascopy Fundamental Analysis
EUR
Mario Draghi, the ECB President, insisted on Greece to stay in the Euro bloc during his public speech on Wednesday regarding the possibility of Greece withdrawal from the Eurozone. Nevertheless, according to him, the ECB will stick to its anti-inflation mandate. The ECB President's comments came after Irish and Belgian central banks reported that Greek exit would not be disastrous for the Eurozone.
USD
Jobless claims in the U.S. didn't live up to the expectations that it will decrease by 5K and remained unchanged, at 370K level, in the week from 6th to 12th of May. Amount of people on rolling unemployment claims increased by around 18K while the number of people on prolonged payments decreased by around 45K. 31 out of 52 states or territory's reported ...
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Consolidation Continues Post The Spanish Bond Auction
Consolidation Continues Post The Spanish Bond Auction
The big event of the morning was the Spanish bond auction, however it failed to generate anything more than an immediate ripple in the FX market. The auction raised just below the top of its target amount of EU2.5bn, at EU 2.49bn. Although demand was strong, Madrid had to pay up to attract investors to its debt. The yield on the 2015 debt it sold jumped to 4.375% vs. 2.89% at an auction in April, the 2016 debt sold with a yield of 4.876% vs. 4.037% at an auction earlier this month.
Will Germany soften its stance?
In the aftermath, EURUSD is down about 20 pips but it remains above 1.27, while Spanish bond yields have actually fallen. The consolidation period in the market may continue as we lead up to the G8 summit in the US this ...
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Loonie Weakens as Europe Hits Commodity Prices
The Canadian dollar yesterday as the crisis in Europe escalates, damping demand for commodities and commodity-dependent currencies. The loonie trimmed its losses today on good fundamentals in Canada and the United States.
Talks about Greece leaving the eurozone intensified after the European Central Bank paused lending to some Greek banks. The ECB said it would resume borrowing after the banks boost their capital:
Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations.
The central bank explained that it does not want to see Greece exiting the currency union, but the bank cannot break the rule to lend only to reliable financial institutions. Anyway, markets reacted negatively ...
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Oil down as equities dip on Greek, euro zone woes
Crude oil futures tumbled on Wednesday, coming under pressure with U.S. equities, as banking troubles in Greece further highlighted the euro zone debt crisis, sparking risk aversion across markets.
The European Central Bank confirmed a Reuters report that it has stopped providing refinancing to some Greek banks as they are severely undercapitalized, keeping oil and other commodity prices pinned down.
The ECB move had erased an uptick in oil prices in morning trading after U.S. data showed that domestic stockpiles rose much less than what an industry group reported late on Tuesday.
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U.S. stocks trim gains, euro falls on ECB talk
U.S. stocks trimmed gains and the euro retreated on Wednesday on speculation that the European Central Bank has stopped funding operations for some Greek banks, rekindling fears of messy financial woes for Greece.
Euro zone central bank sources said the ECB had stopped refinancing operations with some Greek banks. The ECB, which refinances only solvent banks, declined to comment.
It was unclear exactly how many banks were affected.
One person familiar with the matter said four Greek banks' capital was so depleted they were operating with negative equity capital.
Investors have been on tenterhooks over fears of a Greek exit from the euro zone and the financial losses that could cause the financial system.
U.S. stocks pared early gains from encouraging U.S. economic data and the euro ...
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The Bank of England's Next Move
The Week Ahead
■The Bank of England's next move
■Is this the beginning of the end for the Eurozone?
■Fed officials reluctant to signal more easing
■Broader risk environment outweighs Japanese rhetoric
The Bank of England's next move
The BOE kept rates on hold when it concluded its May meeting last week; it also allowed the asset purchase program to come to an end. Since the UK slipped back into recession in Q1 2012 and the growth figures at the start of the second quarter have continued to look weak, the decision to hold interest rates was mostly down to the sticky outlook for inflation. The attention now turns to Wednesday's Inflation Report.
The focus will be on the Bank's growth and inflation forecasts. The growth forecasts are likely to be revised lower. Even ...
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