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February 10, 2012
Greek doubts and Portuguese concerns support Swiss Franc
February 9, 2012
Greece’s “Last Minute” Incomplete Deal
Greek Finance Minister Evangelos Venizelos is in Brussels today. He brings an incomplete deal on austerity measures to Euro zone finance ministers, and they must decide whether Greece has already done enough to receive a bailout package needed to prevent the country default. Venizelos said he hoped they would make a positive decision. “A Greek default will not be on the agenda of today’s emergency finance ministers’ meeting, which starts at 6 p.m. in Brussels”, said a euro zone official.
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February 8, 2012
Greeks Trying Again to Seal an Austerity Deal
One deadline after another has come and gone. A meeting that had already been delayed on Monday night was postponed again on Tuesday evening as the leaders of the Greek coalition parties said they had not seen the document outlining the austerity deal.
Meanwhile, a general strike by public- and private-sector unions shut banks, slowed public transport, closed schools and forced hospitals to operate with skeleton staff on Tuesday.
During yesterday’s late night talks involving EU, ECB and IMF officials, the final touches to the 50-page draft text of the agreement has finally been made. The text was eventually given to officials from Pasok, New Democracy and the far-right Laos party today in the morning.
Later today, Greek Prime Minister Lucas Papademos is due to meet coalition parties in an attempt to seal an austerity agreement to secure a new EU/IMF bailout. The accord is likely to include a 20% minimum wage reduction, pension cuts and 15,000 civil service lay-offs.
Source: BBC
February 7, 2012
SNB to Intervene in the Currency Market
The Swiss National Bank (SNB) will enforce its minimum rate of 1.2 Swiss francs per euro and is ready to buy unlimited amounts of foreign currency in any global interbank market, said interim president Thomas Jordan on Tuesday.
The SNB introduced the 1.2 francs-per-euro cap in September to stem the Swiss currency appreciation in an effort to relieve the pressure on the country’s exporters and prevent the risk of deflation.
However, even at the current rate the franc is still very strong, which is harming export profitability, and firms are suffering from compressed margins. This may force some companies to move production abroad, Mr. Jordan said.
According to Mr. Jordan, this move has helped to some extent to facilitate planning for export-oriented companies, and to reduce the risk of both deflation and severe structural damage to the Swiss economy.
When commenting on the growth outlook, Mr. Jordan said that gross domestic product will slow “considerably” this year and there is “absolutely no risk of inflation in Switzerland” even after the SNB cut its key interest rate to near zero and improved market liquidity.
Source: Wall Street Journal
February 6, 2012
Greece Slides Closer to Default
Yet another deadline has passed without resulting in an agreement on the terms for establishing a new rescue package for Greece. The 130 billion euro ($170 billion) in emergency funding earmarked for Greece is contingent on the Greek government agreeing to, and abiding by, a program of severe spending cuts to address the country’s chronic overspending.
Patience is wearing thin amongst the “troika” comprised of the European Central Bank, the International Monetary Fund, and the European Commission that will provide and oversee the funding. The mounting frustration was evident in comments German Chancellor Angela Merkel made yesterday before the press in Paris:
“We want Greece to stay in the euro,” she told a news conference. But she added: “I want to make clear once again that there can be no deal if the troika proposals are not implemented. They are on the table, time is of the essence. Something needs to happen quickly.”
Source: Reuters
Aussie Retails Sales Falls
Australian retail sales unexpectedly declined in December, the first drop in six months, as consumers spent less at grocers and on dining out in an economy where employment growth stalled last year.
Sales slipped 0.1 percent from a month earlier, when they rose a revised 0.1 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 26 economists for a 0.2 percent gain.
The report validates Reserve Bank of Australia Governor Steven’s decision to lower the nation’s benchmark interest rate by a quarter percentage point on Nov. 1 and Dec. 6 to help revive household demand. The central bank’s board meets tomorrow to decide on rates, and most economists predict a third straight reduction.
Bloomberg
February 1, 2012
US Price Manufacturing Index reported at 54.1
The US PMI headline came in at 54.1, less than the expected 54.5 but in line with the global manufacturing growth. Along with a growth of 1.5% in Construction spending it send a neutral message for forex traders as the numbers were close to the expected figures with no surprises to make a case for a stronger or weaker USD.
ADP Payroll Report Indicates 170,000 New US Jobs Created
The monthly employment report issued by payroll services company ADP suggests 170,000 new jobs were created in the U.S. for the month of January. This is somewhat lower than the 182,000 average taken from a survey of 40 economists.
Source: Reuters
January 31, 2012
Euro Unemployment Hits Record 10.4%
Unemployment in the Eurozone region rose to a record 10.4 percent in December of last year. Spain was the hardest hit of the 17 countries at 22.9 percent unemployment while Austria has the lowest unemployment rate of 4.1 percent.
Guillaume Menuet, economist at Citigroup, said he expected the number of people out of work to increase throughout 2012.
“If you think about the direction of employment expectations that you see across various business surveys, the outlook for employment doesn’t look particularly enticing, simply because the uncertainty is very high. In many cases you find firms continuing to delay investment projects. For those that are still making profits, hiring is being frozen, and for those which are under pressure to hit results or losing money, job losses are becoming the only solution that they have,” he said.
Source: BBC News
January 30, 2012
Spain Appears Headed for “Double-Dip” Recession
Spain’s economy contracted by 0.3 per cent during the fourth quarter, according to official figures released Wednesday, edging the country closer to a new recession as it deals with huge levels of unemployment and painful austerity cuts. The figure announced by the National Statistics Institute broke a run of seven quarters without economic contraction. The institute said GDP fell 0.3 per cent during the quarter compared with a year earlier. For all of 2011, it increased 0.7 per cent.
The economy is expected to slide further through March, placing Spain back in its second recession in less than three years. A technical recession is defined as two consecutive quarters of contraction.
Source: The Canadian Press