AUD/USD is holding just above its Sydney low of 0.9246 with the Greek/Euro debacle putting back on the table the risk aversion theme. AUD/USD obviously walks a fine line here and is the first currency sold when there is a mere whiff of risk aversion. The market is long AUD to the hilt and a move below 1.3300 in EUR/USD and mounting stock losses on European and US bourses could result in a big shake out. One must remember that we hit 0.9157 on Monday this week as Asia reacted negatively to the Goldman Sachs news.
US Treasury Secretary has been on CBS today ramping up the governments financial reforms asa prelude to the Obama speech later today. If the Obama administration thought that healthcare was tough to get through then they have not seen anything yet - the big banks will fight tooth and nail to prevent financial reform. The speech of course will be one of those warm and fuzzy affairs that will be pitched at the people on struggle street. Unlikley to be a market moving event.
BRUSSELS (MNI) – Greece needs to make sure it delivers on its
promised austerity measures this year and intensify its efforts to
consolidate its budget in 2011 and 2012, the European Commission said on
Earlier Thursday, EU statistics agency Eurostat said Greece’s 2009
budget deficit was 13.6% of its GDP and EU officials said there was a
chance it could be revised even higher. A previous estimate put the
deficit at 12.7%.
“The deficit and debt figures released by Eurostat for 2009 …
call for an effective and full implementation,” of this year’s measures,
European Commission spokesman Amadeu Tardio told reporters at a press
He said the 2010 austerity plan “remains valid”
“Beyond that, [Economic and Monetary Affairs] Commissioner Rehn is
clearly saying we have first of all to make sure there is an effective
implementation … beyond that, we will be working with the Greek
authorities to have more details on the measures for 2011 and 2012,”
Longer-term issues like structural reforms and an improvement in
competitiveness are “crucial for the future of the Greek economy,”
But the spokesman evaded questions about whether the fresh Eurostat
data would cause the EU’s executive arm to extend a deadline set for
Greece to bring its deficit below the EU’s 3% stipulated limit. The
current target is 2013.
“This is a dynamic process … this is a situation that evolves …
it has to be assessed regularly,” Tardio said.
He said the deadline could be revisited in the “month of June,
when this will be assessed by the Eurogroup.”
–Brussels: 0032 487 (0) 32 803 665, firstname.lastname@example.org
Out a short time ago comments from EU’s Rehn saying that the commission is not looking at the starting point for Greece or the size of the deficit just the 4% reduction target which Greece is on track to meet.
- Greece’s budget deficit revised up to 13.6% of GDP in 2009 -govts projection 12.7% of GDP – Eurostat
- Deficit revision does not change the reduction target for 2010 – Greek Ministry
- Eurostat expresses reservation on quality of data reported by Greece
- Japan’s sovereign creditworthiness at risk from rising government debt – Fitch
- UK Match Retails Sales 0.4% exp. 0.6%; February revised up from 2.1% to 2.5%
- UK March Car Production Rises 90.2% y/y – SSMT
- UK 2009/2010 Borrowing Comes in Below Treasury Forecast
- March Mortgage Approvals Up, M4 Lowest Since Feb 2003
- EZ April Flas Composire PMI 57.3, exp 56.1
- USD/CNY NDFs under heavy pressure as players speculate that China is about to move on Yuan
[Theme] – its all about the Euro, again. Markets were very steady on the European open with EUR/USD and GBP/USD even gaining a little but it wasn’t long into the session when the bad news (is there anything else) on Greece started coming out in a rush. A blow out in bond spreads, CDS prices but the killer was a revision to Greece’s 2009 budget deficit a full 1% to 13.6% of GDP – that sent EUR/USD reeling. No such thing as a bounce since. Other pairs tracked EUR/USD lower but not to the same degree. Late Asia saw a big go at CNY NDFs perhaps suggesting something at last is about to break here.
[EUR/USD] tried to rally in early London but could only make it to 1.3422 before the “bad” news came rushing out. A revision to Greece’s 2009 budget deficit sent the single currency reeling with no sign of a recovery so far. Intraday range 1.3331-1.3422; last at 1.3335.
[GBP/USD] saw an initial rush higher on the open as stops were triggered above 1.5450 but reported sovereign selling interest just above capped and the pair fell back down into the 1.5420s. GBP/USD got another fillip on a revision to February’s retail sales number notwithstanding the March number was a little worse than expected. Once EUR/USD started to collapse GBP/USD got dragged back below the figure. EUR/GBP seems to be boxed into a 0.8650-0.8700 with good interests on either side. GBP/USD intraday range 1.5374-1.5473; last at 1.5380.
[USD/JPY] was heavy in Asia on a slumping Nikkei but as the local bourse started to pare some of its losses after lunch, the pair recovered back to 93.00. USD/JPY got a boost from the Fitch sovereign creditworthiness comment racing to the highs of the day before heading back towards 93.00 (EUR/JPY sales) as EUR/USD tumbled on the Greece budget revision news. Intraday range 92.74-93.36; last at 93.00.
[AUD/USD] rallied strongly after lunch in Asia as the picture looked a little brighter with stocks paring some of their steep earlier losses. Made it above 0.9300 in early London with EUR/USD and GBP/USD looking a little brighter then fell back into the 0.9350s as Greece tumbled. Intraday range 0.9246-0.9304; last at 0.9254.
Stocks fell in Asia but closed well off their lows – Nikkei -1.27%. European bourses are down nearly 1% across the board. US futures markets are down nearly 0.7% in pre trading. Gold is down around $4.50 from the NY close.
BERLIN (MNI) – Germany’s largest opposition party, the center-left
SPD, on Thursday called for swift parliamentary hearings on possible
financial aid for Greece, arguing that an activation of the aid measures
by Greece is expected by mid-May.
German Chancellor Angela Merkel’s CDU/CSU-FDP coalition government
is dependent on the opposition parties if it wants to get an eventual
aid bill quickly through parliament.
“The SPD parliamentary group demands an extensive [parliamentary]
hearing on the loans for Greece in the coming weeks,” Axel Schaefer, the
SPD’s parliamentary speaker for European affairs, said in a statement.
The aid proposals for Greece are legally and politically disputed, the
“Speed is of the essence because an application by Greece for aid
via loans is expected for mid-May,” Schaefer stressed. All open
questions needed to be answered by the government by then, he demanded.
The SPD wants to have a joint hearing on Greek aid in the
parliamentary committees for budget, fiscal and European affairs, he
Eurozone members have said they will provide up to E30 billion in
bilateral loans for Greece this year in a joint program with the IMF.
Germany’s share would amount to up to E8.4 billion. The exact IMF
contribution isn’t yet known.
German Finance Minister Wolfgang Schaeuble said on Wednesday that
most experts estimated the likely IMF contribution at between E10
billion and E15 billion.
–Berlin bureau: +49-30-22 62 05 80; email: email@example.com
EUR/USD continues it relentless march lower hitting 1.333 a few moments ago but other pairs have steadied. AUD/USD is holding 0.9260 whilst GBP/USD is holding around 1.5400. USD/JPY has only eased about 20 pips so this is purely and simple a Euro “bashing”. Well deserved of course with the shorts not ready to take them back till parity! lol
LONDON (MNI) – UK manufacturing is strengthening with strong growth
in exports and with domestic orders rising for the first time in two and
a half years, the CBI’s latest industrial trends surveys reveals.
The CBI warned that output price inflation is accelerating and
profit margins are coming under pressure from higher costs. The CBI said
quarterly domestic orders rose to a net balance of 12% in the three
months to April, the first significant growth since January 2008.
An improvement in total orders was driven by strengthening overseas
demand, with a balance of 20% reporting a rise in export orders compared
to 3% in the previous quarterly survey.
The quarterly export balance was the strongest since July 1995.
However, the CBI said orders and output are recovering from 30 year lows
and order books are still below normal.
Firms expect strong growth in orders over the next 3 months, with
a balance of 20% expecting total orders to rise in the next 3 months.
Overall business confidence is improving, with a net 24% more
optimistic than in January. This is the sharpest improvement in optimism
seen since January 1994, but the CBI said cost pressures are increasing
and firms expect to raise their prices more rapidly in the next three
months with a balance of 16% predicting price hikes, up from 8% in
–London bureau: 44 20 7862 7941; email: firstname.lastname@example.org
LONDON (MNI) – The following data were released Thursday as part of
the monthly industrial trends survey by the Confederation of British
Industry. Figures are percentage balances.
Apr10 Mar10 Feb10 Jan10 Dec09
Total order book -36 -37 -36 -39 -42
Export order book -16 -18 -23 -33 -41
Volume of output (next 3m) 14 5 7 4 -7
Average prices (next 3m) 16 17 8 8 -6
Stocks Relative To Demand 10 5 12 13 15
EUR/USD made a low of 1.3343 but has just managed to crawl its way back above 1.3350. This is obviously not a short market or one where sellers want to cover their shorts. I think the correct terminology is dead cat bounce. All sorts of names have been on the bid down here – option players with plenty of optionality at 1.3350, semi official types etc but it doesn’t look good.
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