Can European`s debt crisis be solved?
Once again, Europe and the prospects for the Single Currency dominate investor sentiment. Tempting as it is to dismiss the upcoming Summit on Friday as yet another trigger for disappointment, there is arguably a greater chance of success than any of the previous hubristic gatherings. The last few Leaders’ meetings have been massively hyped in advance by politicians certain that their wishes would simply prevail. This time round, they stand as mere mortals; chastened by their experience of failure but more aware of the acute downside risks to the economy which a repeat performance would bring.
The fall of two European Governments since the Cannes Summit shows that change is already underway and, though ECB President Mr Draghi’s speech to the EU Parliament last week may not, strictly, speaking have contained anything new but his focus on “sequencing” is a very big hint that a major package of support will eventually be forthcoming if Budgetary austerity and fiscal consolidation within a legally binding framework can be agreed.
Asian markets have been uncertain whether to take their cue from a weak close on Wall Street on Friday or on hopes for a more positive outlook for Europe. The major indices are higher with both the Hang Seng and Nikkei up almost one per cent, but the elsewhere there are falls of similar magnitude for both China and Indian markets. European equities are all in the black, with US futures indicated back at Friday afternoon’s best levels.
Of course, there’s a long time until Friday and the small matter of global PMI Service Surveys has to be negotiated in the meantime. Germany is the only Continental European country with a reading still consistent with expansion, and a final estimate of 51.4 is expected today. The overall Eurozone indicator is seen at 47.8; unchanged from the provisional flash estimate but fully nine points below its Q1 high.
The UK measure of service sector output has been above 50 in every month since April 2009 apart from a weather-affected dip to 49.7 in December last year when much of the UK was under several feet of snow. Consensus expectations are for a drop from 51.3 to 50.5 but this is perilously close to some nasty headlines being written in the event of a move below 50. After all, the second warmest November since 1956 can hardly be invoked as an explanation for falling business activity.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.