There’s a general lack of enthusiasm surrounding the EU Summit which is expected to provide the “building blocks” for a deeper Euro region integration. Its clear solidarity among leaders and tentative long-term initiatives will not be a crowed pleaser as debt ridden nations such as Spain continue to be driven closer to the edge.
Earlier this week, leaders from Germany, France, Italy and Spain announced a new pro-growth alliance with an estimated €130 billion (representing around 1 percent of GDP) to be set aside to focus on boosting growth and employment. While it may be a worthy exercise to channel funds into investment initiatives, investors remain unconvinced this ‘growth pact’ will be enough to kick-start the economy. Leaders are also light on the detail with questions surrounding the origin of the funding, whether it is ‘recycled’ money already assigned for stimulus programs or newly raised capital.
Economic news overnight saw Gross Domestic Product in the United States rose at an annual rate of 1.9 percent in the first quarter matching expectations but significantly lower than 2011 fourth quarter growth of 3.0 percent. Personal consumption expenditure data showed growth of 2.5 percent in the first quarter slightly lower than the expected 2.7 percent while core expenditure data showed 2.3 percent growth against expectations of 2.1 percent.
Earlier this morning the Australian dollar made a brief break to the downside of US dollar parity, but buying activity around the figure won out with momentum carrying the local unit to current levels of 100.4 US cents. The Euro maintained a controlled declined setting a fresh monthly low of $US1.2406 and remains under moderate pressure around current levels of $US1.2440. Economic data today includes local private sector credit and Chinese Industrial profits, both scheduled for release at 11.30am.