ecb

Caution ahead of payrolls

Markets face up to the US jobs data today in tentative mood, Asian stocks having softened by the greatest degree in nearly two weeks overnight and the past two days having seen high-beta currencies, such as the Aussie and Korean won the weakest performers of the majors. The recent trend in jobless claims, together with the ADP data earlier in the week, have tempered expectations of a strong set of numbers, with the market looking for a 160k gain in headline payrolls following the softer 120k increase seen in March. Read more

04/05/2012 @ 07:16 GMT

The shifting ECB

Even though on the face of it, the market was positioned for no change from the European Central Bank meeting today, there were some residual hopes of a surprise cut given the recent run of disappointing real sector data. There were some subtle changes to the opening statement which suggest that the ECB’s stance could well be softening. It still fears that inflation will remain above 2% this year but removed the reference to near-term upside risks to prices’ stability that was present in last month’s opening statement. Read more

03/05/2012 @ 14:20 GMT

Eurozone credit gets crunchy

The latest M3 data releases by the ECB has further confirmed that we are seeing a fairly steady contraction in lending within the household sector, a trend which is only likely to get worse over the coming months. Overall lending to eurozone households fell to 0.6% YoY (from 1.2%), with much of this decline coming on the back of falling lending for house purchase. It’s no surprise to see this, especially with loan delinquencies increasing, particularly in Spain. Read more

30/04/2012 @ 11:05 GMT

Asian cheer tempers European fear

Bolstered by some reasonably encouraging growth data, the mood in Asia overnight has been constructive, with broad gains in the major bourses of around 1%. Both Australia and South Korea recorded better than expected employment outcomes last month; in the latter, the unemployment rate fell to 3.4% in March from 3.7% previously. In both Malaysia and the Philippines, exports soared by 15% in the most recent month. Read more

12/04/2012 @ 07:19 GMT

ECB: Saviour or Grim Reaper?

From its position as Saviour of the Eurozone a few weeks ago on the back of its 2nd LTRO auction of funds, the ECB is now facing a fresh dilemma with regards to its role in the sovereign crisis as yields on Italian and Spanish debt rise once again. We’ve see some stability emerge today with Spanish yields down to below 5.90%, following on from the push near to 6% seen yesterday. The issue is what impact a resumption of the ECB’s bond-buying program would have on yields, given that there have been no purchases of any significant amount since the early part of the year. Read more

11/04/2012 @ 10:08 GMT

The dangers of liquidity addiction

On a day when the robustness of the US recovery stood in sharp contrast to the continuing difficulties being experienced in Europe, it was little wonder that the dollar consolidated the gains witnessed the previous day in response to the hawkish FOMC Minutes. From the respectable ADP jobs figures to the decent auto sales numbers and signs of a tightening rental market, the prognosis for the US economy does have a healthier glow. However, in Europe, ECB President Draghi spoke about downside risks to the economic outlook after a 0.3% decline in euro-area GDP in the final quarter of 2011. Read more

05/04/2012 @ 07:24 GMT

Growing headaches for the ECB

Over the past few months, the ECB has steered the eurozone from a position of extreme fragility (which some were comparing to conditions that were evident when Lehman collapsed in ’08) to one where EU leaders can now get together and not have it labelled a ‘crisis’ meeting. Even though the ECB is unlikely to make any major policy announcements today, it is likely to have a much more healthy debate with regards to the economy and policy. Read more

04/04/2012 @ 09:01 GMT

Signs that Germany is shifting

There were no great surprises at yesterday’s meeting of EU finance ministers, but some positive noises. The battle lines over Spain’s deficit were drawn and re-drawn, resulting in a shift of this year’s target from 4.4% of GDP to 5.3%. Still, the Spanish government was shooting for 5.8% and now faces a monumental task in delivering the required austerity against the backdrop of an economy flat on its back. Read more

13/03/2012 @ 08:29 GMT

Underlying unease

Ahead of today’s ECB and BoE meetings, and the impending Greek PSI announcement, both investors and traders displayed an understandable reluctance to commit to risk yesterday, although overnight nerves steadied just a little. For example, the single currency is back near 1.32, after lingering threateningly near 1.31 yesterday afternoon. The recovery is partly on the back of positive noises regarding participation in the Greek debt-swap, with the minimum participatory level (below which would mean a disorderly default) apparently set to be reached. Read more

08/03/2012 @ 08:22 GMT

Dollar wobbles

It’s the Aussie and Kiwi that were hurting overnight, the Kiwi taken to a five-week low vs. the USD. Whilst there were domestic factors that were evident in both moves, the wider tone is one of more caution so far this month. There’s a certain dynamic at play, in that there is a concern that the large amount of cash that European banks are currently sitting on could shift the euro into becoming a carry currency. But the more important issue is that where the cash might go. Read more

06/03/2012 @ 08:05 GMT

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