The Euro crashed against both the USD and Sterling in Friday afternoons trading, as, concerns over sovereign debt returned to the markets. Norway, suspended a grant of $42m to Greece, because, Athens did not fulfil commitments and may have broken rules relating to the aid. This aid is used to address inequalities between Northern and Southern European states.
The next worries to hit the Euro zone came from the rating agencies, with, S&P lowering Italian debt to A+ negative from stable, citing the economies slow growth and concerns that the government may struggle to cut the country’s vast public deficit. Fitch ratings cut Greek debt by three notches from BB+ to B+, stating that the down grade was caused by Greece’s inability to create a credible plan for paying off its extensive borrowing commitments. In this respect the Greek prime minister, on Saturday, ruled out debt restructuring and stated that acceleration would be needed in the Privatisation programme. It is also being reported that additional cuts in public sector pay and increased taxes are also being considered.
This weekend, saw large scale protests in Spain against government austerity measures and high unemployment. The protests were mainly attended by the countries youth with the unemployment rate standing at 45% for 18 – 25 year olds. This led to a defeat for the ruling socialist party in the local elections. There is a now a worry about Spain’s continued ability to progress with austerity measures, especially as; regional councils have so much control over public finances. This is probably the biggest concern to the markets at present and is likely to see Euro weakness remain this week.
Today is a quiet day for data releases; therefore, Euro weakness is likely to continue with the markets focusing on any news regarding the Euro zone periphery. With Chinese Manufacturing PMI slowing and worries over the Euro zone, there has also been a return of risk sentiment in the markets which is likely to lead to USD strength.
Posted in Daily Market News on May 30 2014
UK retail sales, surprised to the upside yesterday with a strong increase of 1.2% in April, against expectations of a 0.9% increase. This was the strongest increase in over a year, however, this is being put down to the recent warm weather, late timing of Easter and the Royal Wedding.VIEW FULL ARTICLE
Posted in Daily Market News on May 20 2011 by alex