Today's Highlights
1st Spanish bailout agreed by EU
Australian consumer confidence at a 5 month high
FX Market Overview
The Eurozone gives the impression of a sailor with an increasingly sieve-like boat plugging holes at an increasingly rapid pace. The latest ‘cork in a hole’ is the €30 billion first tranche being sent to Spain to keep Spanish banks afloat. According the Spanish Finance Minister Luis De Guindos, only Finland has requested collateral in return for the funds. I think Finland are very wise and may well be the place to invest money if you have to keep it within the Eurozone. Apparently if you want your funds to be near the euro but not in it, the Danish Kroner is being recommended in some quarters as the safe haven investment but I digress.
It should be remembered that this €30 billion is the 1st tranche of a much larger €100 billion fund and Spain has been granted an extra year to reach the ‘3.0% GDP to deficit’ target, so we will watch bond yields around Europe to see if the markets perceive this package as positive or negative. It is just a redistribution of debt so it doesn’t alter much but the weakness in the euro, which declined to a fresh 3 ½ ear low yesterday, says a lot about the markets view. Other than German inflation data, today is a quiet one for the Eurozone so we will be watching comments from EU leaders and lenders for cues.
Sterling’s excellent performance against the Euro is not reflected elsewhere. Against the USD sterling is struggling to maintain any kind of equilibrium and it is floundering against the Australian Dollar which gained ground after a report overnight showed a rebound in consumer confidence to a five month high. The Australian Domestic economy is out-performing most industrialised countries and, in spite of a reduced interest rate yield, that is maintaining demand for the Aussie Dollar.
Overnight tonight we get the New Zealand business sentiment indicator from the purchasing Manager Index and a rebound in that would add to the strength of the Australasian Dollars.
The US Dollar is on standby ahead of the release this evening of the minutes from the last Federal Reserve Open Market Committee meeting. Feelings are mixed over whether the hint of further monetary expansion would boost or weaken the US Dollar. Seeing the Fed being proactive is a positive but extra money supply is a natural weakener of a currency so the two are quite well balanced. This afternoon brings the US trade balance which isn’t the market mover that it once was. Everyone knows America runs a constant trade deficit of somewhere between 40 and 50 billion dollars so unless it is dramatically different to that, there is little chance this will change perceptions.
It’s a short report today; I could blather on about all manner of rumour and speculation but hard facts are few and far between. So let’s all get on with our days and see what tomorrow brings.
But, I believe I have found the definition of solidarity. An ex-student of A&M University in Texas who later joined the army was killed in a training accident. The funeral was to be held at the College Station’s Central Baptist Church but rumours began to circulate that an anti-war group from the Westboro Baptist Church was planning to picket the funeral of Lt. Col Roy Tisdale. A number of the students decided that they had to do something about it so they organised a ‘Maroon Wall’; maroon being the Universities colours. The wall was a linked cordon of past and present students around the funeral to keep the pickets away and to allow the family to grieve and say goodbye to the decorated soldier in privacy and peace. More than 600 students turned up to form the cordon, the pickets never showed their faces and the family and friends had an uninterrupted funeral.
Quote
“Dignity does not consist in possessing honours, but in deserving them.”
Aristotle
