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IMF Chief Christine Lagarde urges quick action

IMF Chief Christine Lagarde urges quick action

Christine Lagarde has called for decisive action from world leaders to end uncertainties in the global economy that are prolonging “terrifying and unacceptable” levels of unemployment. Ms Lagarde said the economic weakness was not just a result of “tail risks” such as a eurozone break-up but “the degree of uncertainty in many corners of the world – whether it is Europe or America, it is deterring investors from investing and creating jobs.” She said, we need action to lift the veil of uncertainty and also reiterated the softening of the IMF’s position on austerity, adding that governments should no longer pursue specific debt reduction targets but focus on implementing reforms.

At the other end Standard and Poors cut Spain’s credit rating to BBB-minus, with a negative outlook, bringing it to just one notch above junk status highlighting a deepening recession and mounting pressure on Madrid’s finances. The Spanish government unveiled its latest budget designed to make savings of around 13bn euros ($16.7bn; £10.4bn) next year, by cutting public sector wages, education, health and social services. However, despite the cuts, tax rises and various reforms, the Spanish government has said the country’s overall debt levels will rise next year to more than 90% of total economic output.

In terms of US Fed’s Beige Book data, the US economy has expanded “modestly” in the past six weeks thanks to a stronger housing market.

On the FX markets, the cable tracked the EUR/USD pair throughout the session and as a result settled higher, as broad based USD weakness offset any immediate uncertainties surrounding the never-ending Eurozone sovereign debt crisis. In terms of technical levels, supports are seen at 1.5975 and then at 1.5915. On the other hand, resistance levels are seen at 1.6046 and then at 161.18 OUTLOOK NEGATIVE but neutral near term with a possible squeeze of short positions above 1.6046.

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