Asia saw significant equity rallies after a rate cut in India and a stimulus package in South Korea which translated into firmer currencies versus the dollar and yen. As has been the case of late, highs for EUR/JPY were posted late in Asia and early in Europe with a degree of softness creeping in there after. With the EU, UK and US all struggling, it is difficult for any of these currencies to do much more than drift away from the extrme levels seen in Mid-October.
PMI’s were in line with expectations across Europe though the UK was a tick stronger than expected but still at a recessionary reading of 41.5. A reading of 41.5 is expected in the US, a recessionary itself.
credit conditions continued to ease today as Libor fell to its tightest levels versus Fed funds since Lehman’s demise. This could be EUR/JPY supportive if Us shares respond. So far, futures are showing only tepid gains as are European cash markets.
