Financial News

Market volatility has slowed to a near halt ahead of the EU summit meeting event risk on Thursday. The lack of activity is being reinforced by the fact that there have no major economic headlines and very little in the way of macro data to give direction. Treasury markets have been one exception, as Spanish and Italian bond yields have seen steady rises higher. During the Asian session, the Reserve Bank of Australia released the minutes from the July 5th monetary policy meeting, which surprised markets by removing their previously hawkish bias, instead discussing growth concerns and credit contagion possibilities. The EUR/USD ranges between 1.4080-1.4140 with the USD/JPY at 78.95-79.20. Gold has also received a lot of attention posting a record high above $1605 per ounce. The S & P 500 dropped 0.8% European stock markets fell 2% on decreases in risk sentiment. Today, macro data will come in the form of US housing figures. The RBA policy minutes were much less...

The Eurozone sovereign debt crisis remains in focus, with Eurozone finance ministers meeting on Sunday to discuss the next steps for Greece. All clear, for the time being. The Greek government had its implementation law approved on Friday with a majority of 155 to 136 in its second voting round. After the double parliamentary vote, the disbursement of the fifth tranche of the original €110bn package will have no obstacles and will be almost certainly deliberated on Sunday July 3rd by the Eurogroup and on Tuesday July 5th by the IMF. Now that the short term liquidity issue has been solved, all efforts will be put on the finalisation of the “private sector involvement” aspect of the new bailout package. With press reports ‘hinting’ at progresses both on Banks’ (and other institutional investors) commitment to maintain exposure to Greece and on that of a possible clearance from rating agencies that the options would not be considered an event of default,...

Wow, so much to talk about today. I’m going to skip quickly over poor Dominique Strauss-Kahn who is now, fairly obviously, the victim of a conspiracy to frame him. What’s the difference now? Strauss-Kahn was "too soft on Greece" and was focused on ending the bond speculation that he felt was crippling that country (and the Socialist Kahn was also warming up to be France’s next President) so he was "removed" from his position and Legarde (a better Bankster ballplayer) stepped in and teamed up with the EU to push the Greek people into debt slavery and, of course, "save" the Banksters from taking any awkward losses writing down Greece’s very obviously bad debt. With Strauss-Kahn out of the way they stole Billions here and Billions there and shuffled some money around and now that Greece is "fixed" (on the evening of the day Greece finally gives up and votes to pass the draconian austerity measures) and evening of the same day...

The soft patch is over – the US National Manufacturing ISM index for June rose to 55.3 from 53.5 with gains in the production, new orders, and employment indices. This was a surprise, though slightly less so following yesterday’s strong Chicago PMI. That said, the release does buck the trend of the majority of the regional manufacturing surveys for June, and ought to be treated with a ‘degree of caution’ until we have some more corroborating evidence. But evidence for a 2H11 pick up is slowly gathering momentum, with yesterday’s optimistic outlook from Japan’s Tankan survey adding to the sense that supply disruptions are falling away, and normality is being resumed. The prices paid component of the ISM also fell – echoing an earlier decline in the inflation expectations in the Final June Michigan consumer confidence index. Rising activity and falling inflation expectations is a good mix for equity markets, and will likely see gains there resulting in higher yields on longer-dated...

There are certain things in life that we can be sure about...death..taxes and the fact that the Bank will leave rates unchanged on Thursday!! The Bank of England appears certain to keep interest rates at 0.50% at its July policy meeting as concerns mount regarding growth. Meanwhile, forthcoming data and survey releases are expected to indicate that the economy is struggling to generate decent growth and remains mired in a soft patch. It now looks highly likely that an interest rate hike will be delayed until May 2012. Mounting growth concerns mean that if the Bank does act this year, it is increasingly possible that it will relax monetary policy by reviving QE) which has been ‘on hold’ since February 2010. However, given still-significant inflation risks, we believe that more QE is unlikely to occur unless the economy truly goes ‘belly-up’ over the coming months. Nevertheless, we now expect the Bank of England to refrain from raising interest rates until mid-2012....

Greece has announced its economic plan to privatize 87 billion Euros of state assets, 50 billion of which is being planned for bailing out the country until 2015 by selling off loss-making or entirely non-liquid assets. For example, a non-operating airport not far from Athens is being planned to go up for sale. The Postal Savings Bank will also be offered up for privatization; the bank is the country’s biggest holder of sovereign bonds. Prime Minister Papandreou’s government now faces the task of implementing the entire plan. It seems people who are entirely unconcerned about how to pay back at least a portion of Greece’s debt on time are the same ones that created the plan and chose the assets to be privatized. Greece may become a milkmaid for Europe, much in the same way as Cuba was for the Soviet Union. Final estimates were given last night on the consumer price level in the Euro zone and the actual figures will...

Follow through was seen into today’s European trading session with the euro and other higher yielding currencies receiving a bid. An additional Greek vote on austerity measures will come today though this should be more of pomp and circumstance when compared to yesterday’s drama. Technicals hint at a period of consolidation versus the dollar but with euro strength brings opportunities for traders to enter into the EUR/CHF at better levels. Today’s Economic Data Releases: EUR – CPI Flash Estimate y/y – 09:00 GMT Expectations: 2.8%. Previous: 2.7%. Yesterday and today Trichet spoke of the need for “strong vigilance”, another sign of the ECB’s intention to lift interest rates at its next meeting. Euro zone inflation is expected to remain at higher levels for now which could be supportive of further gains. This may offer traders an opportunity to enter into the EUR/CHF at better levels as the pair comes off of its all-time low. Resistance is found at 1.2150. USD – Unemployment Claims – 12:30...

Asian stock markets are following other risk assets higher as sentiment remains elevated, as it has for most of the week.  The EUR/USD has traded above the key psychological 1.45 area, continuing the gains made after the austerity vote in Greece.  The Dollar is currently lower against its major counterparts.  For the moment, markets seem to be working off of the assumption that “no news is good news” and as a result risk appetite is making progress. The EUR/USD is seen between 1.4520-1.4420, with the USD/JPY slightly lower at 80.90-80.30. The majority of the attention continues to center on the Eurozone.  Markets will be watching CPI data and a strong number here will keep interest rate expectations supported and bring buyers to the Euro.  The current expectation is that there is an 80% chance of a rate hike at the next ECB meeting, and a strong CPI number will bring us even closer to a confirmation of this. The upward moves in...

What silliness in the Global markets this morning. The Hang Seng opened up nicely at 22,206 and fell 250 points to 21,952 just after lunch and came back to 22,062 – essentially flat for the day. The Shanghai Composite opened flat at 2,760, also fell 1% by lunch to 2,736 and then rallied back to flat for the day. The Nikkei, on the other hand – gapped so far up at the open (100 points) that even the all-day sell off left them up 70 points for the day at 9,648. India, on the other other hand (and they have Gods with many hands so it’s OK), was pretty flat but they are up 5% for the week so all seems well over there. Europe is mixed (up) as well with the CAC and FTSE up about half a point but down from being up a full point in early trading, while the DAX opened at 7,167 and now failed to hold...

A return of the European debt crisis combined with expectations of slowing global growth has broadly supported dollar over the past month. Should the Greek parliament approve the additional austerity measures USD strength may to wane in line with the longer term trends of the FX markets. However, in the near-term higher yielding currencies such as the AUD, NZD, and CAD could face headwinds should commodity prices continue to decline along with a further deterioration in the already sluggish US economic data. Economic Data Releases: GBP – Current Account – 08:30 GMT Expectations: -5.0B. Previous: -10.5B. UK trade data is expected to show an improvement in Q1 of this year and may support sterling in the short term. Unfortunately the effect of last week’s UK MPC meeting minutes that opened the door for additional asset purchases may void the pound from maintaining any near term gains. Today’s inflation report hearings at 09:00 GMT may also touch on the downside risks to inflation. On the...