Demands Strict Labor

(Reuters) - Greek resistance to the strict conditions attached to a bailout fund on Tuesday sapped recent momentum in markets spurred by hopes the global economy is improving, and the euro fell on renewed fears of a messy debt default. The Australian dollar leapt to a six-month high but stocks turned negative after the central bank held rates steady at a review when markets had positioned for a rate cut. Opinions were divided over whether the wrangling over Greece's debt restructuring talks would eventually be resolved or trigger contagion across other vulnerable euro zone countries, tempering risk-taking investments. MSCI's broadest index of Asia-Pacific shares outside Japan rose as much as 0.4 percent to its highest since September 1, then reversed direction, and last stood barely ...

Forex News and Events: High yielding currencies continued to outperform as the developed nations central banks have all committed to a sustained period of ultra-loose monetary policy (unlimited free liquidity) and the contraction of volatility has put the carry trade back on the map. As with the crowded dividend trading in the equity markets, we suspect that growth projections in many of these nations have already been priced in. So the kicker at this point will only be the interest rate differentials and trading momentum. Australian retail sales came in slightly weaker than expected at -0.1% m/m vs. 0.2% exp although there was little spillover into the AUD. AUD OIS are pricing in a 70% probability of a 25bp cut at tomorrow RBA meeting so we are also looking for a quarter worth of ...

Forex News and Events: Risk appetite remained restrained following comments by German Chancellor Merkel that a joint euro bond was the "wrong solution". Merkel then went on to say that the ECB "can choose its own means of currency stability". ECB President Draghi defended the ECBs independence, but suggested that some degree of flexibility as he said 'other elements' could track if there is a 'fiscal compact, binding governments to stronger public deficit and debt rules'. Risk currencies continued to find buyers as the coordinated central bank action has spurred hope that European policymakers will announce a cure all next week. EURUSD rallied in mid Asia session from 1.3450 to 1.3481 while AUDUSD rose from 1.0208 to 1.0255. Asian equities indices were mixed with the Hang Seng up 0.67% ...

FX Briefing Highlights Rating agencies challenge proposal to involve private creditors... ...and downgrade Portuguese bonds to “junk” status ECB raises refinancing rate to 1.5%, confirms upside risks to inflation German economy posts robust increase in production and orders in May Chinese central bank raises interest rates by 25 basis points No Summer Break for the Periphery after all The calmer mood in the markets after the Greek parliament had passed the austerity plan did not last long. Eurogroup finance ministers approved the next €12bn bailout tranche to Greece, but failed to unveil a comprehensive Greek aid package. Markets did not take this amiss on Monday, but then S&P quashed the French plan to involve private creditors, and Moody's downgraded Portugal's ...

Compared to yesterday’s doom and gloom session in the US, today is shaping up to be much more of a optimistic day. US markets were able to finish flat yesterday and the Asian indexes are all trading in the green. While nothing has fundamentally changed between yesterday and today, specifically in the Eurozone, there is a feeling that the systemic threat of an EU meltdown may have been exaggerated. We suspect that the recent losses in risky assets are most likely due to adjusted growth expectations and not so much to contagion fears. Over the past few days, several EU nations have announced further austerity measures and this trend looks to continue. Strict fiscal discipline will cut into EU growth and hamper global growth potential in the future, but any growth created should be ...