Europe Agrees On Fiscal

Trading in the London Session was choppy with the market unwilling to take any clear direction as we lead up to tomorrow's informal EU summit. The market toyed with the idea of Eurobonds (they like that idea and risk assets may rally tomorrow on any signs they are on the horizon.) Then they focused on the prospect of a showdown between Germany and France, Europe's de facto leaders, which caused a mild sell off. Right now the chances of the latter happening are more likely especially since Merkel is unlikely to be re-elected next year if she agrees to Eurobonds (read Germany guaranteeing the bulk of Europe's debt), which would never fly with German voters. Although the EU President said that everything is on the table for discussion tomorrow, he also said that no concrete measures will be ...

The dollar fell to its lowest in a month against a basket of currencies on Friday, extending falls made on expectations of more U.S. monetary stimulus and helping the euro hold its ground as the bloc agreed steps to prevent the debt crisis spreading. Euro zone finance ministers agreed on Friday on a temporary increase in the capacity of their bailout funds to prevent a new flare-up of Europe's sovereign debt crisis, although analysts said markets may judge it too small to be convincing. That left the euro still vulnerable to concerns about unsustainable debt levels in some euro zone countries. Some strategists said the euro could test the lower end of the range roughly between $1.30 to $1.35 that it has traded in since late January. Market players were also focused on Spain, where the ...

The dollar fell to its lowest in a month against a basket of currencies on Friday, extending falls made on expectations of more U.S. monetary stimulus and helping the euro hold its ground as the bloc agreed steps to prevent the debt crisis spreading. Euro zone finance ministers agreed on Friday on a temporary increase in the capacity of their bailout funds to prevent a new flare-up of Europe's sovereign debt crisis, but markets may judge it too small to be convincing. That left the euro still vulnerable to further selling pressure on concerns about unsustainable debt levels in some euro zone countries. Market players are focusing on Spain's budget, in which the government is expected to announce harsh austerity measures in a bid to get the country back on a sustainable fiscal path, ...

Dukascopy Fundamental Analysis EUR European governments urged Spain to implement larger budged deficit cuts to prevent debt crisis from returning to the region. 10 days ago Spanish PM Rajoy unilaterally increased Spain's deficit target to 5.8% of GDP for year 2012 and claimed the country will aim to attain region's common target of maximum 3% in 2013. The announcement was not praised by region's officials who recently signed fiscal discipline treaty. USD US federal budget deficit widened more than expected in February, reported Department of the Treasury. The US federal budget balance declined to minus 231.7 billion US Dollars on a seasonally adjusted basis in February as compared to minus 27.4 billion US Dollars in January. Experts predicted the deficit to attain 229.3 billion US ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD After marathon talks that extended well into Tuesday morning, a new bailout deal totalling the targeted EUR130 bn for Greece was finalised. Most of the deal’s components had been well flagged to the market, but the mere fact that negotiations did not fall apart helped stabilise sentiment and allowed EURUSD to keep a steady footing above 1.32. Although a significant hurdle has been passed and a disorderly default on March 20 appears to have been avoided, several points remain unresolved. First, the terms on the PSI are slightly harsher than previously determined as private sector investors will need to accept higher nominal losses than previously agreed and at a lower coupon; it remains to be seen whether these terms alone would be enough ...

Weekly Economic and Financial Commentary : 05/02/2012 U.S. Review Off to a Good Start for the Year The employment report for January showed that 243,000 jobs were added with the unemployment rate declining slightly to 8.3 percent. The details of the report however, suggest that unseasonably warm weather may be playing a role in the stronger job gains. The ISM-Manufacturing Index posted a marginal improvement in January as new orders jumped for the month. Export orders also posted a nice increase suggesting that the effects of a Eurozone slowdown have yet to affect U.S. manufacturers. Stronger-Than-Expected Job Gains to Start the Year This week's economic data continued to point toward sustained economic growth. The employment situation improved at a better-than-expected pace in ...

Morning Briefing : Euro rise on a short covering rally What's new: Forex: Euro lifted by short squeeze, more pressure ahead Global Markets: Risk appetite edged higher lifting Asian stocks, riskier currencies Euro zone: Italian and Spanish debt auctions eyed Greece: Germany and France warn Greece it will get no more funds until it agrees on bond swap Switzerland: SNB Chairman Hildebrand resigns over controversial trade made by his wife Forex rates in Asia and Indices: EUR/USD: 1.2797 - 1.2745 USD/CHF: 0.9511 – 0.9466 GBP/USD: 1.5485 - 1.5446 USD/JPY: 76.91 – 76.78 EUR/CHF: 1.2135 – 1.2106 EUR/JPY: 98.30 – 97.97 DowJones: 12'392.69 +0.27% NASDAQ: 2'676.56 +0.09% S & P 500: 1'280.70 +0.23% Nikkei: 8’422.26 +0.38% Shanghai: 2’285.74 +2.69% Gold: $ 1’618.80 Crude Oil: $ 102.01 Comments: The ...

What’s new? When we signed off last week, the Germans and the French were trying to hold Europe together. This morning, they are still trying. “Don’t you live in Europe?” asked a friend at a party over the weekend. “Yes…much of the time.” “Well, maybe you can tell me what is going on with this European debt crisis?” “I was hoping you would tell me.” The closer you to get to Europe, the harder it is to see what is going on. In the trees of constitutional changes, pledges of solidarity, plans A-Z, official and unofficial announcements from more than a dozen different sovereign countries and half a dozen European agencies…it’s hard to see the forest of debt. Debt levels need to come down. And falling debt levels mean a slumping economy. The rest is detail. In America, stock market ...

Morning Briefing : News out of Europe starts to lower investor expectations What's new: Asia: US and Asian equities in negative territory FOREX: Support within the majors seems mixed but most of the riskier bets selling off ECB: Cuts interest rates to 1%, more liquidity measures but falls short of more bond buying efforts BoE: Holds rates makes no changes in asset purchases target EU: EU agrees to stricter budget rules, but fiscal union likely limited to EZ US: Weekly Jobless claims at 9-month lows China: More signs of slowing economic growth, yet retail sales resilient Forex rates in Asia and Indices: EURUSD: 1.3372- 1.3281. USDCHF: 0.9284 – 0.9238. GBPUSD: 1.5657- 1.5585. EURJPY: 103.87 – 103.15. USDJPY: 77.73 – 77.55 DowJones: 11’997.70 -1.63% NASDAQ: 2’596.38 -1.99% S & P 500: ...