Sentiment Stumbles Again

The euro (EUR) edged higher to 1.2824 rebounding from 1.2724 against the US dollar on hopes that EU leaders will agree on steps to fight the debt crisis in Europe. Investors expect the French President Francois Hollande to suggest joint eurozone bonds at the EU meeting in Brussels on May 23. The idea of joint bonds can help with funding difficulties for some heavily-indebted eurozone countries but that policy has been rejected by Germany before. EU leaders are also expected to focus more on growth and ways to help Greece stay in the euro. The single currency remains under pressure as the market is worried about Spain’s growing financial problems as well as developments in Greece ahead of a repeat election in June. The US dollar (USD) stumbles against a basket of currencies on an improved ...

The euro (EUR) edged higher to 1.2812 rebounding from a four-month low at 1.2641 against the US dollar. The single currency tumbled on Friday on concerns over Greece’s political uncertainty as well as growing instability in the Spanish banking sector. European leaders of G8 met during the weekend to discuss steps needed to fight Europe’s debt crisis and reaffirmed the importance that Greece remains in the eurozone. G8 leaders also focused on ways to stimulate eurozone growth but no detailed plans on how to resolve the problems were announced. But the single currency remains under pressure as investors are worried about a messy Greek default and exit from the euro ahead of a repeat election in June 17. The US dollar (USD) stumbles against a basket of currencies as sentiment in the market ...

Fundamental Analysis EUR "Today's dismal PMI figures clearly indicate that the euro zone economy remains in dire straits" - Martin Van Vliet, senior economist at ING The euro zone’s manufacturing contracted in April, a sign the economy is far from out of the woods. The purchasing managers index declined to 47.9 from 49.2 in March, Markit data showed on Monday. Reading below 50.0 indicates industry contraction. USD "There’s more work to be done in Europe" - Mark Bronzo, a fund manager at Guggenheim Investments U.S. stocks declined after data showed that manufacturing contracted in the euro zone. GBP "Political developments in Europe are weighing on indices" - Rupert Osborne, a futures dealer at IG Index U.K. stocks declined sharply on Monday after manufacturing in the single currency ...

(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 ...

The Week Ahead Highlights Risk sentiment stumbles again Waiting for Jackson Hole Are 'safe-havens' due for a short-term pullback? SNB intervention risk is here to stay The ECB calms sovereign debt markets Key data and events to watch next week Risk sentiment stumbles again Risk assets (stocks, commodities, JPY- and CHF-crosses, and commodity currencies) stabilized further to start this past week, but suffered what seems likely to be the first in a series of periodic relapses, as market conviction remains extremely low. We remain cautiously optimistic that the sell-off in the first half of August marked the low point in the current risk retrenchment, but we are keenly aware that risks remain skewed to the downside. In support of the view that a medium-term bottom ...

Previous session overview The euro inched higher against the dollar in a quiet European trading session Friday, shrugging off the overnight downgrades of Portuguese debt from Standard and Poor's Corp. and Fitch Ratings, and bolstered by reports that Portugal will eventually seek a bailout. Traders also seemed unfazed by slightly disappointing German business confidence data. The Ifo survey of business confidence fell in March for the first time in nine months and a drop in the Ifo business expectations index added to evidence that the country's economic outlook is weakening. Later the dollar strengthened slightly against the euro after stronger-than-expected U.S. gross domestic product data. The euro slipped to USD1.4128, from USD1.4137. The 2010 fourth-quarter U.S. GDP was revised to 3. ...

Weekly Economic and Financial Commentary U.S. Review Slow Growth Is Still the Order of the Day * Second-quarter real GDP was revised up slightly to a 1.7 percent annual pace. The modest upward revision in personal consumption more than offset declines in structure and government outlays. * The Consumer Confidence Index remained exceptionally low in September, falling 4.7 points to 48. Most of the drop in the index was in the expectations component. * Personal income and spending both posted better-than-expected gains in August. Much of the increase, however, is likely due to the extension of unemployment benefits. The U.S. Economy Is Proving to Be More Resilient While some indicators released during the week were weaker than expected, worries that real GDP could slip into ...