Market Brief
EURJPY weakened for a third day to 114.72 on continuing speculations that EU debt issues will worsen and industrial production may falter, EURUSD remained weak but supported well above the 1.4000 levels before reports to show EU industrial orders fell, continuing debt issues and possible weak German IFO numbers, GBPUSD fell to lows of 1.6057 after Moody’s placed 14 UK banks on review for possible downgrade, NZDUSD moved up to 0.7968 after businesses raised inflation expectations, USDJPY traded at 82.08 highs, Gold moved to $1520, Silver to $35.44 as investors sought metals as an alternative to the Dollar. Greek PM after his cabinet meeting yesterday said that if Greece does not receive the next quarterly tranche of cash, it will be unable to honor its financial obligations, thereby halting payments such as wages, pensions and said that the IMF had made it clear that it cannot disburse the payment without a guarantee that EU funds will be available to Greece next year. Greece also announced plans to privatize state assets, intentions to impose fiscal austerity measures to save further 6 Billion Euros in order to lower the deficit to 7.5% of GDP this year and further plans will be announced next week. Fitch affirmed Belgium’s AA+ ratings but lowered the outlook to negative, joining Italy, citing heightened political risk and would be downgraded if it misses its official deficit targets. SNB Vice Chairman Jordan said he is very worried about the Swiss franc’s rise and would act if deflationary risks were to emerge. He did say however that, until now, the export sector has coped reasonably well with the stronger CHF. Jordan added that interest rates can stay low for longer if inflationary risks remain contained.
There were not any US economic news yesterday with the focus remaining on EU which could carry on today after Germany released GDP figures in line with expectations, IFO Business Climate and EU industrial new orders are up next along with UK CBI Reported Sales and Public Sector Net Borrowing while US releases New home sales expected to be lower and manufacturing from the Richmond area.
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