EU ministers and IMF fail to agree on Greek debt package
City Index November 21, 2012 1:49 PM
<p>Yesterday lunchtime EU’s Jean-Claude Juncker said there was a ‘good chance’ that the Eurogroup meeting would reach a conclusive Greek deal by night. Naturally the […]</p>
Yesterday lunchtime EU’s Jean-Claude Juncker said there was a ‘good chance’ that the Eurogroup meeting would reach a conclusive Greek deal by night. Naturally the euro gained against the dollar on the back of this headline. Not before long, however, Juncker began back-peddling and confirmed he was ‘not entirely sure’ of a same day Greek deal and the euro reversed its short term gains.
Focus was then turned to Bernanke’s speech to the Economic Club of New York yesterday evening. The Fed Chairman said the failure to avoid fiscal cliff issues would pose a ‘substantial threat’ to the recovery and highlighted the threat of $607bn in automatic tax hikes and spending cuts, proposed for the coming year. He, however, seemed optimistic that 2013 could be a very good year for the US economy, if they are successful in resolving the nation’s longer-term budgetary issues.
Following more than 11 hours of Eurogroup talks, EU finance ministers and the IMF failed to reach an agreement on the latest tranche of Greek aid. The euro fell by over 50 pips on the back of this news. IMF Chief Christine Lagarde advised that some good progress had been made but there was still a way to go. A number of proposals have been discussed by ministers including reducing interest rates on loans to Greece from eurozone countries in 2010 from 1.5% to 0.25%. This morning Eurogroup President Juncker confirmed the meeting had not been fruitless and there are ‘no major political disagreements’. Talks between the ECB and IMF will resume on Monday 26th November.
The yen has continued to weaken against the dollar on the back of comments made by opposition leader Abe, saying his party would pursue monetary easing on a scale exceeding that when his party was last in power. Poor Japanese export data also contributed to a softer yen.
With euro talks recommencing early next week, we will today be looking to data released from the UK and US. At 9.30am MPC meeting minutes and PSNB figures will be released, forecasted at £4.1bn. This afternoon at 1.30pm US manufacturing PMI will be published and we will also be expecting to see a decline in unemployment claims from 439k to 415k.
Supports 1.2707 | Resistance 1.2823
Supports 81.05 | Resistance 82.50
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.