Euro two-month low before EU Ministers meet
The euro approached a two-month low against the dollar as European policy makers prepared to meet to seek a plan to maintain Greek solvency and keep the nation in the common currency.
The Greek parliament has adopted a budget for 2013 that involves 9.4bn euros ( £7.5bn) of cuts in spending. After holding a vote on its 2013 national budget, the Greek government has passed the bill, which includes additional cuts touching the most controversial areas of pensions, salaries and benefits. The reaction by the markets has been very subdued, with the Euro ticking marginally higher. Time pressure for a deal on Greece is growing because Athens has to redeem 5 billion euros worth of treasury bills on Nov. 16 and had been counting on cash from the next aid tranche to help cover that. That has left Athens mulling rolling over the bills.
With most U.S. markets shut for a holiday, investors focused on a euro zone finance ministers’ meeting later on Monday which will discuss whether to release a new tranche of funding to debt-plagued Greece after it approved a tough 2013 budget on Sunday. The euro changed hands at $1.2714 from $1.2746 the previous session after the latest report from the Economy Ministry proved grim reading. Its said growth in Germany, Europe’s biggest economy, is expected to slow in the fourth quarter and during the first quarter of 2013. Meanwhile industrial production in France, Europe’s second biggest economy, reduced last month.
Apart from fretting over the sovereign debt crisis in the Eurozone, where signs of increased stress are beginning to show up in credit and bond markets, market participants will get to digest the latest Quarterly Inflation Report from the Bank of England. The report will come only a week after the MPC voted to keep both the benchmark borrowing rate and the Asset Purchase Facility (APF) unchanged. The report, which will come with new growth and inflation forecasts, should reveal the reasoning behind the latest decision by the MPC, while the Q&A will give savvy journalists an opportunity to question the governor on future economic outlook.
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