Euro weakens on Greek and Spanish debt problems
US Beige Book awaited
FX Market Overview
It is not a good sign when the German Chancellor can only visit Greece under heavy guard and amidst a protest ban. It is a clear indication of just how unpopular the enforced austerity is in Greece and just who the Greeks blame for the policy. Perhaps the protesters who ignored the law were swayed by Mrs Merkel’s commitment to be a "partner and friend" to Greece. That would be a result after 4 years of recession and with unemployment amongst the young running at 55%.
Either way, the focus of the markets is as much on Spain as Greece and, as we know, a Spanish meltdown would be far more destructive than anything Greece could do to the Eurozone. That meltdown could be as much domestic as European as separatists within Spain are pushing for a break from Madrid rule and have all the ammunition of poor economic management to make their case. Things are very visibly bad when the Spanish Red Cross is mounting an appeal to feed the poor of Spain. It’s a very sobering event and the Euro understandably lost a bit of ground yesterday.
The Governor of the Bank of England is due to leave his job very soon and in a fashion reminiscent of departing Foreign Office officials, he appears to feel freer to express his real views in the last days of his tenure in the Bank. Hence, in a speech last night, he gave a fairly frank analysis of his views on monetary policy and on tight inflation targets. Hi speech was a little overshadowed by Boris Johnson’s stand-up comedy routine at the Conservative party conference and by poor manufacturing and industrial production data. Sterling limped along for most of the day and only found a little strength in late trade. That would have been helped by the report from NIESR suggesting the UK was out of recession in Q3. Oddly the cited the Olympics as a major influence but we have seen very negative effects from the Games on retail activity so I am still not convinced NIESR have done their sums right.
Overnight we heard that Australian consumer confidence rose moderately this month but at an index reading of 99.2 is still below the middle marker of 100 which separated optimism from pessimism. Even a 25 basis point interest rate cut has not swung shoppers back into positive territory and yet the Australian Dollar strengthened a little.
Today’s data diary isn’t a big one. We get industrial production data from France and Italy but then things are quiet until the Federal Reserve releases its Beige Book. It’s a bland title but the pages within that beige exterior reveal the views of the Federal Reserve districts and that book forms part of the agenda for the next Federal Reserve Open Market committee meeting. It is released at 18:00 GMT so we will read and digest ready for tomorrow’s reports.
Other than these, Felix Baumgartner couldn’t plummet to earth yesterday because it was too windy. That’s sounds an innocuous problem but when you are relying on a balloon to take you 23 miles up, even a light breeze could have you crossing continents before you leap out. That’s make the chase car’s job a thrilling one wouldn’t it. The jump is being rescheduled for tomorrow. I guess he would have butterflies in his stomach if the altitude didn’t kill them.
Graffiti seen in London
Homeless people. Lighten your load by not buying a dog.