FOREX-Euro inches higher, hovers near 2-mth peak

July 28, 2010 By Leave a Comment

TOKYO, July 27 (Reuters) – The euro ticked up towards a two-month peak above $1.3000 on Tuesday, although traders were cautious about bidding it up too much as they await clarity on Deutsche Bank’s exposure to euro zone sovereign debt.

Deutsche (DBKGn.DE) posted second-quarter pretax profit in line with expectations but it has not revealed its exposure to European sovereign debt following tests to see how well banks in the region would stand up to financial shocks. [ID:nLDE66Q07V] [ID:nLDE66P1X4]

Some traders said that if the bank gives details and there are no shocks, that could help build more confidence in euro zone banks and trigger buying in the euro.

In that case, the single currency’s next target would be last week’s two-month high of $1.3029 EUR= and then $1.3125, a 38.2 percent retracement of its December-June fall, technical analysts said.

“Despite all the negative talk about the stress test results, German interest rates are rising and the euro firmed, which seems to suggest lingering euro short-covering needs,” said Osamu Takashima, chief FX strategist at Citibank in Tokyo.

The euro rallied on Monday on relief the tests were over, although concerns they were not rigorous enough mean investors are still hesitant to make big bets on it, while some traders say euro zone debt redemptions this week could also constrain it.

Citi estimates there are some 45 billion euros worth of maturing bonds and coupon payments this week. [ID:nLDE66M1PR]

The euro rose 0.1 percent to $1.3009 EUR=. It climbed as high as $1.3019 earlier. Any fall was seen likely to be limited while it remained above support at $1.2870 — its 100-day moving average — and last week’s low around $1.2730.

The euro gained 0.2 percent to 113.11 yen EURJPY=. It has met stiff resistance at 113.30-50 in the past two weeks, partly on selling by Japanese exporters.

But Takashima said it was likely to rise above 113 yen.

“It’s true Japanese exporters were lowering their target price to around 113 yen from 118 yen. But looking at trade data, exports to Europe are stagnating, which points to limited selling by exporters,” he said.

The Aussie was steady on the day at $0.9021 AUD=D4, after rising 0.9 percent on Monday as investor risk appetite revived after the stress test results.

Chartwise it could be set to rise against the yen. On the daily Ichimoku chart for Aussie/yen, the tenkan sen has risen above the kijun sen line, in a bullish signal.

The top of the Ichimoku cloud now lies roughly around 80 yen, and a rise above that level would be another bullish sign.

“I think investors will tiptoe back into high-yielders as worries about Europe will gradually subside,” said a trader at a Japanese brokerage house.

The U.S. dollar gained 0.1 percent against the yen to 86.97 yen JPY=, though it was capped by offers around 87 yen from Japanese exporters. (Additional reporting by Reuters FX Analyst Krishna Kumar in Sydney; Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Euro dips, pulls away from 2-month high

July 20, 2010 By Leave a Comment

TOKYO, July 19 (Reuters) – The euro pulled back from two-month highs on Monday, as investors booked profits on its rally while lingering concerns about Europe’s sovereign debt problems looked likely to keep a lid on future gains.

High-yielding currencies like the Australian and New Zealand dollars were also under pressure as subdued U.S. data and falling equities .SPX led investors to shun risky trades.

Trade was light in Asia with Tokyo shut for a holiday.

The euro EUR= dipped 0.2 percent to $1.2904, pulling back from a two-month high of $1.3008 hit on Friday on trading platform EBS, with news that the International Monetary Fund and the European Union have suspended a review of Hungary’s funding programme putting some pressure on the single currency.

This means Hungary will not have access to remaining funds in its $25.1 bln package. [ID:nLDE66H021]. Dealers said this reminded investors of the region’s sovereign debt problems just days ahead of the results of stress tests on euro zone’s banks. The results are due out of Friday.

“While European leaders believe that the tests will bring confidence, the markets may not believe the sugar-coated figures with the euro primed for another leg down in the weeks ahead,” said David Scutt, forex trader at Arab Bank, Australia.

“Heavy selling pressure is expected to emerge ahead of resistance at $1.3100-10.”

Near term support for the euro is seen around the $1.2850 area, the 50 percent retracement of the euro’s fall from a high near $1.3820 on March 17 to a four-year low of $1.1876 hit in early June. Traders said there was talk of light stops around $1.2880.

The dollar edged up 0.1 percent against the yen to 86.64 yen JPY= but was not far from a seven-month low of 86.27 yen hit on Friday on EBS.

Latest data from the Commodity Futures Trading Commission showed speculators have been increasing long positions in the yen and cutting longs in the U.S. dollar. .

EYES ON YEN

Traders said with U.S. yields heading lower, the dollar could break past support near its seven-month low.

Such a drop could spark speculation of potential Japanese intervention to restrain the yen, especially if the dollar drops to a 15-year low by breaching the November 2009 trough of 84.82 on EBS.

With the yen’s latest rise having brought it to levels that could cause pain to Japanese exporters, a focal point is whether Japanese authorities will take steps to curb the yen’s rise, through measures such as verbal or actual intervention, or additional monetary easing measures.

“We’re getting into the territory where the MOF will start to get a little bit more vociferous,” said Gareth Berry, a currency strategist with UBS in Singapore.

Berry said the Ministry of Finance (MOF) may start to express concern over the exchange rate, adding that such rhetoric could help limit the dollar’s downside.

“I think there is plenty of scope for further downside beyond 85 before we actually see an actual act of intervention,” he said.

Japan has not conducted any foreign exchange intervention in more than six years, having last intervened in March 2004.

When the dollar slid to the 84.82 yen trough against the yen in late November, the BOJ stepped closer to currency intervention than at any time in the preceding five years by checking exchange rates with commercial banks. [ID:nT35213]

Soon after, the BOJ called an emergency meeting in early December and decided to pump 10 trillion yen ($115.5 billion) in three-month funds into the banking system.

On Friday, a private survey showed U.S. consumer sentiment weakened in early July to an 11-month low and capped a week which saw U.S. data printing on the softer side, raising questions about the sustainability of a U.S. recovery. [ID:nN15208925].

A resulting slide in U.S. stocks .SPX hit growth-linked currencies like the Australian dollar, which dipped 0.2 percent to $0.8680 AUD=D4. Earlier, traders said a model fund was seen selling the Aussie, which shed 1.6 percent on Friday. (Additional reporting by Anirban Nag and FX analyst Krishna Kumar in Sydney; editing by Kazunori Takada)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Analysis: Big money tiptoes back to Europe

July 15, 2010 By Leave a Comment

(Reuters) – Whether the euro zone is at the middle or end of its existential sovereign debt crisis, investors are starting to take a fresh look at the region’s assets and wondering if this year’s market panic was overdone.

Few analysts would be brave, or rash, enough to sound an “all-clear” on the regional financing storm — one seeded by Greek government profligacy and dodgy statistics but which also exposed flaws in the single currency’s framework and spread rapidly to other highly-indebted euro governments.

The global reverberations through April and May saw equity volatility .VIX .V1XI — the seismograph of financial shocks — soar to levels not seen since the depth of the 2008/2009 global recession, even as euro zone industrial production growth was roaring at an annualized rate in excess of 10 percent.

Spooked by a lack of visibility and heightened political risk, investors scrambled to reduce exposure to euro government debt, underlying equity markets and banking stocks and the euro currency itself. Conviction about the likely outcome was less important than the fact it was impossible to see a roadmap.

Yet after three months of infusing market prices with “tail risks” — or worst-case scenarios from cascading sovereign defaults to banking system collapses and euro breakup — money managers are again looking for opportunities to exploit the resulting price extremes in the event of more probable outcomes.

The question now is whether that euro asset phobia has run its course and whether EU policymakers — backed by the Group of 20 leading world economies — have managed to create a firebreak with their May 10 rescue package for euro bond markets.

Two months on, a progress report shows the authorities have at least reached first base — stabilizing bond prices with selective buying by the European Central Bank and stopping the hysteria, contagion and self-feeding spirals that forced Greece to be locked out of capital markets altogether.

Debt market premia for the peripheral euro zone governments, with the exception of Spain, are all below pre-rescue levels. And despite a credit rating downgrade in the interim, Spain has continued to sell bonds around the world to brisk demand.

European equity markets .FTEU3 have rebounded by six percent, while equity market volatility .V1XI has almost halved. Even the euro has managed to return within a whisker of pre-rescue levels against the U.S. dollar.

RESCUE REACHES FIRST BASE

So far, so good then. For euro governments, time has been bought to get parliamentary approvals for the rescue; establish a special financing vehicle to act as future fireman; rebuild confidence in European banks via stress tests and — crucially — pass austerity budgets to fill in widening fiscal holes.

For investors, the political fog starts to lift, visibility returns and they can resume what they do best — assess valuations, high-frequency economic and earnings data and relative pricing.

And in that regard, they find a premium on European blue-chip dividends over core government bond yields at its highest level since the Lehman Brothers’ bust in autumn 2008 and Thomson Reuters data shows these equity risk premia almost two percentage points above historical averages.

“Despite the fiscal austerity measures coming out of the region, we think that Europe is now an interesting place to invest,” Henry McVey, New York-based head of Asset Allocation at Morgan Stanley Investment Managers, told clients this month.

“Now may be the time to consider shifting regional preferences out of the United States and back toward Europe.”

Such views were almost startling in their rarity this year — certainly after six months in which fund tracker EPFR reported a net $12 billion exiting western Europe equity funds.

Not to get carried away, McVey goes on to explain that a big price spike may not be warranted; public cohesion around austerity plans was still a risk; and bullishness centered on rotating to core “value” stocks rather than “growth” stocks.

But he added: “We now believe that — compliments of the Greek debt debacle — European financials and energy companies have become more attractively priced.”

Fund managers polled by Bank of America Merrill Lynch this month also showed extreme pessimism easing and they reported that underweight positions in euro zone equity fell to almost a third of extreme June levels.

Likewise, euro currency bears have also retreated and data from the Commodity Futures Trading Commission shows speculative “short” euro contracts falling to a third of May peaks.

Even global demand for European government debt has re-emerged with Spain’s international bond issue. China’s currency reserve managers are reported to have taken almost 10 percent of this month’s 6 billion euro debt sale — soothing fears that central banks were cutting euro exposure.

The euro zone has not imploded in a puff of smoke and, despite its many travails ahead, the investment world cannot ignore the world’s second biggest economy for long.

(Graphics by Scott Barber; editing by Stephen Nisbet)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Euro steady after retreat, Greek auction eyed

July 14, 2010 By Leave a Comment

TOKYO, July 13 (Reuters) – The euro consolidated well below two-month peaks against the dollar on Tuesday as investors hesitated to go long on the single currency and risk large short dollar positions during the U.S. earnings season.

The euro held steady at $1.2595 EUR=, with resistance seen roughly around $1.2690, the trendline from the December high. Near-term support is seen near $1.2550, the previous session’s low.

Investors were also cautious about the single currency ahead of Greece’s return to capital markets for the first time since late April.

The debt-laden country is seeking to raise 1.25 billion euros through a sale of six-month Treasury bills. That could prove to be a litmus test for the euro in the short term ahead of the results of the euro zone banks’ stress tests next week, traders said.

A robust response to a Spanish debt auction earlier this month saw the euro rally to two-month highs. That coincided with worries the U.S. was heading towards a double-dip recession, sending the greenback to its lowest in nearly two-months against a basket of currencies.

Those concerns have taken a back seat for now, but traders said real money investors and margin traders were still being cautious, given lingering worries about a global slowdown.

“The way they are positioned, there is still a feeling that a a double-dip recession could happen,” said Jonathan Cavenagh, a currency strategist at Westpac, Sydney.

“I think they could be in for a major surprise if a majority of U.S. corporate results beat expectations. That should see the U.S. dollar stage a comeback and hence investors are a bit cautious about going too short.”

The dollar index was barely moved at 84.199 .DXY, having bounced from the key December 2009 trendline support around 83.80.

The dollar held steady against the yen at 88.57 yen JPY, with decent resistance seen in the 89-89.15 yen area.

Dollar offers from Japanese exporters await above 89 yen and are likely to limit gains in the dollar, traders said.

The yen struggled for most of the previous session after Japan’s ruling Democratic party suffered a stinging defeat in a weekend parliamentary election but recouped its losses during North American trade.

“Japan’s political uncertainty will likely keep yen assets under pressure,” said Tsutomu Soma, senior manager of the foreign asset department at Okasan Securities.

“Yet players cannot figure out whether selling in Japanese assets, such as shares, would also spark yen selling or ultimately trigger yen buying on risk aversion.”

Higher-yielding currencies such as the Australian and New Zealand dollars initially benefited after Alcoa (AA.N) posted a higher-than-expected profit for the second quarter on Monday. [ID:nN12206110]

But those currencies later gave back gains as Shanghai shares .SSEC fell more than 1 percent, somewhat cooling risk appetite, a senior trader at a big Japanese bank said.

Shanghai shares fell more than 2 percent at one point after the government said it would continue to rein in speculation in the country’s red-hot property sector. [ID:nTST000264]

Other Dow heavyweights reporting earnings this week include Intel Corp (INTC.O), JPMorgan Chase (JPM.N) and General Electric (GE.N).

The Australian dollar fell 0.4 percent to $0.8737 AUD=D4 after rising as high as $0.8780 earlier in the day. Resistance is seen at the June 21 high of $0.8860 and at $0.8884, a 61.8 percent Fibonacci retracement of its fall from April’s peak of $0.9389 to May’s low of $0.8066.

The New Zealand dollar dipped 0.1 percent to $0.7119 NZD=D4, off the day’s high of $0.7146. ($1=.7944 Euro) (Additional reporting by Anirban Nag and FX analyst Krishna Kumar in Sydney, Masayuki Kitano in Tokyo; Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Euro adds to broad gains, hits 2-mth high vs dollar

July 10, 2010 By Leave a Comment

July 9 (Reuters) – The euro hit a two-month high against the dollar and rose broadly on Friday as improving risk demand prompted European banks to pick up the currency.

The euro EUR= climbed as high as $1.2723 according to electronic trading platform EBS. London traders cited demand from a Swiss bank from around $1.2680 as helping to push the single currency higher.

It rose broadly, climbing to 112.69 yen EURJPY= and 83.84 pence against sterling EURGBP=D4, its highest versus both currencies since June 21. (Reporting by Naomi Tajitsu)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

UPDATE 1-Swiss consumption picks up, Europeans stay away

July 6, 2010 By Leave a Comment

July 5 (Reuters) – Swiss retail sales posted a strong rise in May, reflecting a healthy recovery in private consumption but European tourists spent fewer nights in Swiss hotels as the strong franc priced some out of the market.

Retail sales rose 3.8 percent in May in real terms versus the year-earlier month and were 1.3 percent higher compared to the previous month when adjusted for seasonal effects, the Federal Statistics Office said on Monday. [ID:nZAT010921]

“Consumption has been positive over the last couple of quarters and the numbers reflect a positive trend,” Credit Suisse analyst Fabian Heller said.

“We think consumption remains a driver of growth, especially given the improvement on the labour market,” he said, adding that demand from Europe was one of the drivers of the recovery.

The recent sharp rise of the Swiss franc against the euro, weakened by the European debt crisis, has triggered concerns for the Swiss export industry and data published by the Federal Statistical Office suggested hoteliers have also been affected.

While overnight stays in Swiss hotels increased 3.2 percent in May compared to the same month in 2009, driven by Asian tourists, the number of nights spent by visitors from Europe fell 0.5 percent.

A 10 percent rise in the franc versus the single currency this year has increased further the cost of a holiday in Switzerland, commonly regarded as an expensive destination, for visitors from the euro zone.

The number of nights Italians spent in Swiss hotels declined by almost 10 percent in May and Germans also spent fewer nights.

The Swiss National Bank dropped its pledge to fight an excessive appreciation of the Swiss franc versus the euro at its policy meeting in June and its directors have said that deflationary risks are fading.

But SNB chairman Philipp Hildebrand said the SNB was keeping a close eye on the Swiss currency’s volatility in an interview published on Sunday. [ID:nLDE66309R] (Reporting by Silke Koltrowitz and Sven Egenter, editing by Mike Peacock)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

RPT-GLOBAL MARKETS-Asia shares slip; debt puts euro on defensive

July 1, 2010 By Leave a Comment

SINGAPORE, June 29 (Reuters) – Asian stocks fell on Tuesday and were on course for their worst quarterly performance since the end of 2008, while funding concerns in the euro zone sent the single currency tumbling to a record low against the Swiss franc.

The tepid nature of the rich world’s recovery from global recession kept investors on the defensive, with a general flight to relative safe havens prompting a rebound for gold and falls in U.S. and Japanese government debt yields to multi-month lows.

European shares were also expected to fall, with financial bookmakers forecasting the benchmark indexes in Britain, France and Germany to open down 0.8-1.2 percent. Eurostoxx 50 Futures STXEc1 slid 1.7 percent. [.L]

Chinese stocks .SSEC fell 4 percent to a 14-month low, as investors started pulling funds from the market to prepare for a major initial public offering by Agricultural Bank of China, pointing to tight liquidity in China’s markets. [.SS]

“The market is still facing financing pressures and we are still worried about the domestic economy,” said Zheng Weigang, an analyst at Shanghai Securities.

Tokyo’s Nikkei .N225 fell 1.3 percent to a three-week closing low and MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.6 percent.

The Nikkei has fallen around 14 percent in the second quarter and the MSCI AP ex-Japan is down roughly 8 percent, putting both on track for their worst quarterly performance since the meltdown in the final months of 2008 following the collapse of Lehman Brothers.

World stock markets rebounded strongly in 2009, but investors are now fretting about the uncertainty of the outlook as governments — many facing ballooning debt burdens — start to turn off the stimulus that supported the fledgling recovery.

EURO WOES

The euro fell around 1 percent against the yen EURJPY=R, dragged down by losses against the Swiss franc. It fell 0.2 percent on the day to touch 1.3323 francs EURCHF= on trading platform EBS, the weakest since its launch in 1999.

The pair has now lost 4 percent since June 17, when the Swiss central bank backed off from a pledge to fight excessive appreciation in the franc.

Traders in Asia said investors were wary of growth-linked currencies and the euro amid festering problems in the euro zone, where funding pressures re-emerged with interbank lending rates hitting their highest in almost seven months on Monday.

Banks must repay 442 billion euros ($545.5 billion) to the European Central Bank on Thursday, leaving a potential liquidity shortfall in the financial system of more than 100 billion euros. [ID:nLDE65R0LE]

The premium investors demand to hold 10-year Italian, French and Spanish government bonds, rather than euro zone benchmark German Bunds, all widened.

“Renewed debt stress stories…have weighed a bit on the euro and led to renewed safe-haven parking in the yen and Swiss franc,” said dealer at a Swiss bank.

“Investors’ sentiment towards peripheral Europe remains cautious and fragile to say the least.”

The search for safer assets pushed the U.S. benchmark 10-year yield US10YT=RR to its lowest since April 2009, while the benchmark Japanese Government Bond 10-year yield JP10YTN=JBTC fell to a seven-year low. [JP/] [US/T]

Concerns about Europe’s debt burden contributed to a rebound for gold XAU=, with spot prices for the safe-haven metal rising more than $3 to $1,239.20 an ounce. [GOL/]

“Gold is likely to remain pretty well supported in the current quarter. Safe-haven demand for gold remains prominent,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

The euro’s weakness — and consequent relative dollar strength — also contributed to falling in oil prices, making dollar-denominated crude more expensive for buyers in Europe and Asia.

Oil CLc1 fell nearly 1 percent to $77.53 a barrel, as forecasts indicated Tropical Storm Alex was likely to skirt the main production region in the U.S. Gulf of Mexico. [O/R]

“Markets are concerned that European banks are pressed to pay 442 billion euros. If these worries sustain and the euro falls, a stronger dollar would pressure oil prices down,” said Serene Lim, a Singapore-based oil analyst at ANZ Bank. (To read Reuters Global Investing Blog click here; for the MacroScope Blog click on blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on blogs.reuters.com/hedgehub)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Euro slips after chart failure, caution over Spain

June 18, 2010 By Leave a Comment

TOKYO, June 17 (Reuters) – The euro slipped from its two-week highs versus the dollar on Thursday as its short-covering rally ran out of steam and as worries about Spain’s public finances and banking system stopped it overcoming key resistance.

After failing to break above $1.2350-55 twice in the past 48 hours, the euro EUR= is at risk of retreat to around $1.2175, a 38.2 percent retracement of its rebound from a four-year low below $1.19 set last week.

“Players think the euro’s rise led by short-covering has come to a near-term end,” said an FX trader at a major Japanese brokerage.

“We hear overseas investors with real money, such as pension funds, are picking up the euro,” the trader said. “But besides them, there are few aggressive buyers of the euro, leaving the single currency vulnerable.”

Traders said the euro was likely to see selling into rallies as tolerance for risk subsided on a revival in concerns about euro zone fiscal problems.

“Some people want to reduce risk positions on worries about Spain,” said Daisuke Karakama, market economist at Mizuho Corporate Bank.

But the euro’s fall has not been as sharp as in May when worries about the impact of Europe’s fiscal problems drove it down rapidly, and this indicated that although some shorts have been covered, the market is still short euro longer term, Karakama said.

“The euro would have been sold much more hysterically if it were a month ago,” he said.

It slipped 0.3 percent from late U.S. levels to $1.2268. It is more than half a percent below the two-week high of $1.2354 hit on Wednesday but still up about 3 percent from the four-year low of $1.1876.

The market will be watching a Spanish bond auction later in the day after the spread of Spanish government bond yields over benchmark Bunds soared to a euro lifetime high on Wednesday. [ID:nLDE65F23Y]

“In the past few sessions, rises in the credit spreads of euro zone countries have not led to euro selling as much as before. But unless conditions in Europe improve, correlation (between the euro and European bond spreads) will return,” said Junya Tanase, senior strategist at JPMorgan Chase Bank.

The European Union holds a summit on Thursday to discuss ways to strengthen budget discipline and economic policy coordination.

The EU and IMF on Wednesday denied a report they and the U.S. Treasury were drawing up a safety net for Spain. But worries about Spanish banks put pressure on yields and the market will be looking for the result of bank stress tests which the Spanish central bank said would be published soon. [ID:nLDE65F1X2] [ID:nLDE65F1AL]

The euro also fell against sterling, the yen and the Swiss franc. It shed 0.7 percent to 112.01 yen EURJPY=R as Japanese banks sold. That helped push the dollar down 0.5 percent to 91.30 yen JPY=.

The dollar index .DXY =USD was up 0.3 percent at 86.37, well above support near 85.85 which is the index’s May 28 low.

The Australian dollar AUD=D4 eased from one-month highs of $0.8674. It was trading at $0.8593, down 0.4 percent, with some players looking to sell into rallies after it failed to hold gains above $0.8650.

The dollar was little changed on the day against the Swiss franc CHF= at 1.1307 francs ahead of a Swiss National Bank meeting.

The SNB is expected to keep interest rates low but may announce measures to drain excess money from the economy after flooding the market with francs since 2009 to keep the currency from appreciating too rapidly. [ID:nLDE65E2DB] (Additional reporting by Reuters FX analyst Krishna Kumar in Sydney and Rika Otsuka in Tokyo; Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Germany, France present united front on policy

June 16, 2010 By Leave a Comment

(Reuters) – Germany and France on Monday moved to mend fences on policy splits, agreeing the European Union needs economic governance by all 27 member states, not just euro zone nations, as Paris had previously proposed.

World | France | Germany

Meeting in Berlin, Chancellor Angela Merkel and President Nicolas Sarkozy stressed their desire to speak with one voice in Europe, pledging to tighten policy coordination and improve budget discipline to contain an ongoing debt crisis.

“More than ever, Germany and France are determined to talk with one voice, to adopt common policies, to give Europe the means to met its legitimate ambitions,” Sarkozy told reporters at a joint news conference with Merkel.

“So (we will have) economic governance at the level of the 27 (member states) and in the event of necessity, there’ll be meetings concerning euro problems within the euro zone.”

The EU must convince financial markets the bloc has a common response to the worst crisis to hit the 16-country euro zone since the single currency was created 11 years ago and can prevent Greece’s debt problems spreading to other countries.

Paris and Berlin had been at loggerheads over how to approach to closer economic governance, and the two postponed talks initially scheduled for last week for fear they would be unable to reach an agreement, a French government source said.

Merkel stressed that government by the 27 was particularly important to her and that measures aimed at punishing budgetary sinners in the euro zone needed to be ramped up.

“We need a strengthening of the (EU) Stability and Growth pact. We also agree that we need to consider changes to the (EU) treaties,” Merkel said, noting that Germany and France would submit proposals on this matter soon.

“One point here could involve withdrawing voting rights for notorious sinners in the euro zone, which seems important to us, because we really need treaties with bite to make this stability and growth culture work,” she added.

Sarkozy said the two leaders did not want to create new institutions within the EU to realize their vision.

“I am convinced, like Madame Merkel, that the solution to Europe’s problems will not come by creating new institutions but by being able to hold operational, pragmatic meetings,” he said.

Merkel and Sarkozy said they were sending a joint letter to Canadian Prime Minister Stephen Harper, the G20 chairman, seeking to accelerate reforms in financial regulation.

The letter also pushes for a global tax on financial transactions and agreement in principle on a levy on banks to pay for the cost of financial crises, Merkel said.

“Germany and France want to make things move rapidly at Toronto,” Sarkozy said.

Merkel, whose ruling coalition is under fire at home, rejected fears that budgetary cuts she planned would choke off growth in Europe’s largest economy and noted that France was planning “important steps” to overhaul its own finances.

(Additional reporting by Noah Barkin, Sarah Marsh, Andreas Rinke, Crispian Balmer and Emmanuel Jarry; Editing by Andrew Hay)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Euro bounce running out of steam on profit-taking

June 16, 2010 By Leave a Comment

TOKYO, June 15 (Reuters) – The euro’s rally showed signs of fading on Tuesday, with investors taking profits and sentiment towards the single currency staying fragile as debt worries returned after Moody’s cut Greece’s credit rating to junk grade.

The Australian dollar pulled back further from a one-month high versus the U.S. dollar as traders reduced demand for higher-yielding currencies after minutes of an Australian central bank meeting confirmed the market view that interest rates will be on hold at least for the next month. [ID:nSYC002333]

Traders said with the euro EUR= failing to break near term resistance at around $1.23, the single currency’s impressive run in the past few sessions was showing signs of fizzling.

“The euro would need more than short-covering to move decisively up from here,” said a senior trader at a Japanese securities house, adding that the market still looked vulnerable to euro-negative news given shaky equity markets.

The euro was at $1.2204 EUR=, down 0.1 percent from late New York trade on Monday, retreating further from the previous day’s high of $1.2298 on trading platform EBS.

Traders said Moody’s downgrade was being used by investors as an excuse to pare positions in the single currency. Moody’s cut Greece’s credit rating to junk status and said the country faced substantial risks. [ID:nWNA3381].

The Moody’s downgrade could still have an affect in the background, but an overall revival in risk appetite may check sharp losses, traders said.

“We might get a bit of a negative reaction in Europe but it was kind of already headed that way anyway with Greece, and the more important thing to watch is the periphery countries like Spain and Portugal,” said a senior trader at a European bank in Hong Kong.

Resistance is still around a Fibonacci retracement level at $1.2301, which is 23.6 percent of the euro’s move from an April 14 high to its June 7 low, and support is seen at around $1.2165 on hourly charts.

The euro fell as far as $1.1876 on June 7, its lowest since March 2006.

“Whether the bounce in the euro from $1.19 to $1.22 is more than a brief relief bounce remains open for debate but the sharp reaction to the rating downgrade overnight suggests that sentiment is still extremely fragile,” Matthew Strauss, senior currency strategist at RBC Capital wrote in a note.

The euro fell 0.2 percent on the yen EURJPY= to 111.70 yen. The U.S. dollar edged down to 91.50 yen JPY= as sell orders from Japanese exporters were seen capping its gains.

In the options market, the recent rebound in euro/yen and Aussie/yen was reducing the attraction of yen calls and prompting traders to dump options since euro/yen failed to break below a barrier at 108 yen last week.

Implied volatilities on short-end dollar/yen options have fallen, with one-month vol hitting a one-month low below 11.5 percent JPYVOL, extending a decline in the past week.

The Bank of Japan detailed a new loan scheme after its policy meeting, saying it would lend up to $33 billion to commercial banks to help redirect money to industries with growth potential, but analysts doubt its effectiveness when loan demand is low. [ID:nTOE65D05B] [ID:nTOE65E03M]

The minutes of the Reserve Bank of Australia’s June policy meeting said it was able to leave interest rates unchanged in the near term as previous rate hikes gave it time to see how Europe’s debt woes would affect the world economy and to wait for more information on domestic inflation.

Board members also said disinflationary forces in the domestic economy had not been as strong as expected and highlighted the importance of coming data on consumer prices, due in late July, reinforcing expectations for steady interest rates at its next policy-setting meeting in early July.

The Australian dollar AUD=D4 fell 0.2 percent to $0.8564, extending its pullback from a one-month high of $0.8665 the previous day when an overall improvement in risk appetite supported demand for higher-yielding currencies. (Additional reporting by Anirban Nag in Sydney and Hideyuki Sano and Charlotte Cooper in Tokyo; Editing by Joseph Radford)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Merkel, Sarkozy to show united front ahead EU summit

June 14, 2010 By Leave a Comment

(Reuters) – The leaders of France and Germany will seek to overcome deep-rooted disagreements on European economic governance at a meeting in Berlin Monday, setting the tone for a European Union summit later this week.

France | Germany

A show of unity from Berlin and Paris, the motors behind European integration, is seen as crucial for reaching decisions at the summit Thursday on tightening policy coordination and strengthening budget discipline to contain a debt crisis.

The EU must persuade financial markets the bloc has a common response to the worst crisis to hit the 16-country euro zone since the single currency was created 11 years ago and can prevent Greece’s debt problems spreading to other countries.

“The crisis showed the European system had arrived at its limits: you cannot have a common currency and such gaps in competitiveness,” a French government source said. “You cannot have one country (Germany) where everything is oriented toward gains in productivity and competitiveness and other countries favoring consumption and social protection.

“Either we manage to come closer or we risk having a political crisis as well as an economic and financial crisis.”

Yet Paris and Berlin are at loggerheads over the correct approach to closer economic governance — so much so that German Chancellor Angela Merkel and French President Nicolas Sarkozy postponed their talks initially scheduled for last week for fear they would be unable to reach an agreement, the source said.

Influential German magazine Der Spiegel said at the weekend Franco-German relations had reached a “historic low.”

France’s priority is to create an “economic government” for the euro zone — something Germany has resisted — with regular summits of the 16 leaders and a dedicated secretariat, to coordinate economic policy and focus on rebalancing the European economy and boosting growth.

Paris has also called for Germany to boost domestic spending in order to balance its huge trade surplus.

Berlin last week launched the biggest austerity drive in Germany since World War Two and sees budget discipline as a priority, pressing Paris to implement savings measures.

The German Finance Ministry has circulated a 9-point plan demanding stiffer sanctions against governments that flout European fiscal rules, including suspending repeat offenders’ EU voting rights, and an insolvency procedure for states.

CONCESSIONS

Nonetheless, Sarkozy and Merkel went some way to assuaging concerns about a French-German rift last week by issuing a letter to the European Commission calling for faster financial reform and an EU-wide ban on naked short selling of shares and sovereign bonds.

In addition, France looked to anchor its commitment to tighter fiscal policy at the weekend by pledging to cut the budget deficit by 100 billion euros by 2013 and to bring it down to the EU target of 3 percent of GDP.

According to the French government source, Paris believes firmer budget commitments by euro zone governments and other concessions such as approving Bundesbank President Axel Weber to succeed Jean-Claude Trichet at the head of the European Central Bank, could enable a rapprochement with Berlin.

He added new EU institutions for economic governance would not likely see the light of day any time soon.

“Economic governance is something that will take one or two years. You shouldn’t think we will have a breakthrough on June 14 or 17,” he said. “It is a birth that will be long and difficult because the interests at stakes are colossal.”

(Editing by Janet Lawrence)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

PREVIEW-Merkel, Sarkozy to show united front ahead EU summit

June 14, 2010 By Leave a Comment

BERLIN/PARIS, June 13 (Reuters) – The leaders of France and Germany will seek to overcome deep-rooted disagreements on European economic governance at a meeting in Berlin on Monday, setting the tone for a European Union summit later this week.

A show of unity from Berlin and Paris, the motors behind European integration, is seen as crucial for reaching decisions at the summit on Thursday on tightening policy coordination and strengthening budget discipline to contain a debt crisis [nLDE65C0FB].

The EU must persuade financial markets the bloc has a common response to the worst crisis to hit the 16-country euro zone since the single currency was created 11 years ago and can prevent Greece’s debt problems spreading to other countries.

“The crisis showed the European system had arrived at its limits: you cannot have a common currency and such gaps in competitiveness,” a French government source said. “You cannot have one country (Germany) where everything is oriented towards gains in productivity and competitiveness and other countries favouring consumption and social protection.

“Either we manage to come closer or we risk having a political crisis as well as an economic and financial crisis.”

Yet Paris and Berlin are at loggerheads over the correct approach to closer economic governance — so much so that German Chancellor Angela Merkel and French President Nicolas Sarkozy postponed their talks initially scheduled for last week for fear they would be unable to reach an agreement, the source said.

Influential German magazine Der Spiegel said at the weekend Franco-German relations had reached a “historic low”.

France’s priority is to create an “economic government” for the euro zone — something Germany has resisted — with regular summits of the 16 leaders and a dedicated secretariat, to coordinate economic policy and focus on rebalancing the European economy and boosting growth.

Paris has also called for Germany to boost domestic spending in order to balance its huge trade surplus.

Berlin last week launched the biggest austerity drive in Germany since World War Two and sees budget discipline as a priority, pressing Paris to implement savings measures.

The German Finance Ministry has circulated a 9-point plan demanding stiffer sanctions against governments that flout European fiscal rules, including suspending repeat offenders’ EU voting rights, and an insolvency procedure for states.

CONCESSIONS

Nonetheless, Sarkozy and Merkel went some way to assuaging concerns about a French-German rift last week by issuing a letter to the European Commission calling for faster financial reform and an EU-wide ban on naked short selling of shares and sovereign bonds. [ID:nLDE6580AA]

In addition, France looked to anchor its commitment to tighter fiscal policy at the weekend by pledging to cut the budget deficit by 100 billion euros by 2013 and to bring it down to the EU target of 3 percent of GDP. [ID:nLDE6510ZJ]

According to the French government source, Paris believes firmer budget commitments by euro zone governments and other concessions such as approving Bundesbank President Axel Weber to succeed Jean-Claude Trichet at the head of the European Central Bank, could enable a rapprochement with Berlin.

He added new EU institutions for economic governance would not likely see the light of day any time soon.

“Economic governance is something that will take one or two years. You shouldn’t think we will have a breakthrough on June 14 or 17,” he said. “It is a birth that will be long and difficult because the interests at stakes are colossal.” (Editing by Janet Lawrence)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

EU leaders try to convince markets over euro crisis

June 14, 2010 By Leave a Comment

(Reuters) – European Union leaders will make a new attempt this week to convince financial markets they can contain a debt crisis by agreeing how to tighten economic policy coordination and strengthen budget discipline.

The 27 EU member states and the executive European Commission will also set out plans for boosting economic growth and creating jobs at a summit on Thursday, three days after the leaders of Germany and France discuss strategy in Berlin.

A show of EU unity would help persuade markets the bloc has a common response to the worst crisis to hit the 16-country euro zone since the single currency was created 11 years ago and can prevent Greece’s debt problems spreading to other countries.

“Our priority is putting order into our public finances. We need fiscal consolidation and a new financial stability culture in Europe,” European Commission President Jose Manuel Barroso said after meeting German Chancellor Angela Merkel on Friday.

“There is new awareness in Europe that rules have not been respected and must now be respected. Circumventing the rules … is putting at risk our collective economic future. We need to move in the opposite direction. We need to strengthen our rules and the way the EU runs its economy.”

Failure to show solidarity could increase the nervousness on markets that has helped drive down the euro and shares globally, and increased worries that countries such as Spain and Portugal could follow Greece into debt payment trouble.

Agreement on an aid package for Greece worth 110 billion euros ($132.4 billion) and a safety net for other euro zone countries worth 500 billion euros has gone some way to calming investors’ worries, at least in the short-term.

A task force under EU President Herman Van Rompuy has started work on reforms to reinforce budget rules and changes are planned to tighten financial regulations after the global economic crisis [ID:nLDE65A0O5]

CONCERNS OVER EU ABILITY TO ACT

But EU leaders have often appeared slow to react during the crisis and investors still have medium- and long-term concerns. They want to see how the rescue mechanisms will work in practice and whether the bloc is truly making a united stand.

“Policymakers in the EU have been rumbled. They’ve regularly fallen behind the curve and their announcements have often been full of smoke and mirrors,” said Philip Whyte of the Center for European Reform think tank.

“The markets don’t see how the southern European states are going to get out of the predicament they are in.”

The tone for the summit could be set by Monday’s talks between Merkel and French President Nicolas Sarkozy, who lead Europe’s largest economies. Both want to protect the euro and improve Europe’s economic performance but disagree how to do so.

The German Finance Ministry has circulated a nine-point plan demanding stiffer sanctions against governments that flout European fiscal rules, including suspending repeat offenders’ EU voting rights, and an insolvency procedure for states.

Sarkozy has avoided the rigor sought by Berlin, and wants an “economic government” for the euro zone, with a dedicated secretariat to coordinate economic policy and focus on rebalancing the European economy and boosting growth.

Sarkozy and Merkel postponed a meeting last week at the last minute, a move widely seen as a sign of how far relations have deteriorated between countries long seen as the EU’s engine.

They went some way to assuaging concerns by issuing a letter to Barroso calling for faster financial reform and an EU-wide ban on some forms of trading in certain shares and state bonds, but doubts remain about their relationship.

“It’s hard to see that France and Germany will be singing from the same song sheet,” Whyte said.

PREVENTING “CONTAGION”

EU leaders want to address concerns that the debt crisis will spread to EU states that do not use the euro but have big deficits or debts such as Hungary and Britain.

They face hostility to important parts of the drive toward closer budget surveillance from British Prime Minister David Cameron, who is attending his first EU summit. IDnLDE64K1FW

British Foreign Secretary William Hague said on Sunday the country’s new coalition government remained firmly opposed to proposals that EU countries, including Britain, should give Brussels an early sight of their budget plans.

“That’s not a proposal that we can support,” Hague told the BBC. “The British budget must be presented to the British parliament and that is … the position we will maintain.”

Hague said he hoped the euro zone would survive current financial turmoil. “It’s in our national interest for those who do join the euro to be OK,” he said.

Austerity plans announced by some European governments also face the threat of labor unrest over fears that such moves will limit growth and cause job losses.

The EU leaders will try to address these concerns when agreeing on their Europe 2020 strategy for the next decade to cut unemployment, which was 9.7 percent in the EU in April, and double annual growth potential to 2 percent.

(Editing by Matthew Jones)

For more on the EU, double-click on

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

FOREX-Euro up on Spain auction; caution before ECB

June 11, 2010 By Leave a Comment

LONDON, June 10 (Reuters) – The euro rose on Thursday as strong demand at a Spanish debt auction eased concerns about how the country will fund its large debt, but caution before a European Central Bank policy decision capped gains.

Peripheral euro zone government bond yield spreads over German benchmarks narrowed after the auction of new three-year bonds. [ID:nLDE6590T9] [ID:nLDE6590U7] Widening spreads in recent days have weighed on the single currency.

But traders said market players were wary of taking on long euro positions ahead of the ECB decision, with option expiries at $1.20 and $1.21 later in the day also helping to confine the single currency within a $1.20-$1.21 range.

Technical analysts said the euro’s downward trend would remain intact barring a move above $1.2135, the 50 percent retracement of the 2000-2008 euro rally.

The ECB is expected to hold rates at 1.00 percent. It could offer extra funds to banks to ease strains from the euro zone debt crisis, and bank chief Jean-Claude Trichet will be pressed for details of its bond-buying programme. [ID:nLDE6560K2]

“The ECB decision is all about event risk,” said Gavin Friend, currency strategist at nabCapital. “It is difficult to see anything positive coming out of it, although the mood is likely to be set by the broader market backdrop.”

“The Spanish auction has cemented euro support a little. It adds to the story that the euro may be due a bit of a bounce as it has come a long way down in a relatively short space of time,” he said.

At 1005 GMT, the euro was up 0.6 percent against the dollar EUR= at $1.2052, above Monday’s four-year low of $1.1876. Traders said investors were tending to sell on rallies towards $1.21, but a break above $1.21 could see the euro extend gains.

Severe debt problems in a number of euro zone countries, coupled with concerns about the future of the euro have caused the currency to fall around 16 percent against the dollar since the start of the year.

Against the yen, the euro rose 0.1 percent to 109.50 yen EURJPY=R. The dollar was down 0.2 percent at 91.04 yen JPY=, staying above its 200-day moving average at 90.90 yen.

ECB AWAITED

The ECB’s decision is scheduled for 1145 GMT, with Trichet’s accompanying news conference at 1230 GMT.

“If they continue to buy bonds that may be seen as positive, but on the other hand they haven’t succeeded so far in stabilising yields,” said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.

The Bank of England announces its policy decision at 1100 GMT with no change to interest rates expected. [BOE/INT]

Earlier, Dai Xianglong, chairman of $114 billion China’s National Social Security Fund, said the euro would gradually stabilise and the U.S. fiscal deficit remained a big concern, which helped lift the euro back above $1.20.

The comments came as a relief as some in the market have said the euro zone debt crisis could prompt central banks, including China’s, to cut their euro reserves.

The euro was also helped by China confirming exports jumped 48.5 percent in May from a year earlier, which buoyed shares and riskier currencies. [ID:nTOE65605K]

The Australian dollar rose 1.7 percent against the U.S. dollar AUD=D4, buoyed by strong Australian jobs data, while a rate rise in New Zealand dollar lifted the Kiwi 1.6 percent versus the U.S. dollar NZD=D4.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Euro extends gains as short-covering picks up pace

June 11, 2010 By Leave a Comment

June 10 (Reuters) – The euro extended gains on Thursday as short-covering picked up pace, helped by comments from a Chinese pension fund chief who said the single currency could weather the sovereign debt crisis.[ID:nBJB003864]

Currencies | Global Markets

The European single currency rose as high as $1.2064 on trading platform EBS, rising more than one U.S. cent from an earlier low of $1.1957. (Reporting by Satomi Noguchi)
Currencies
Global Markets

Filed Under: International News Tagged With: , , , , , , , , , ,

CORRECTED – CORRECTED-FACTBOX-ECB Governing Council: Who’s Who?

June 3, 2010 By Leave a Comment

June 2 (Reuters) – Vitor Constancio started as the European
Central Bank’s vice-president on Tuesday, succeeding Lucas
Papademos and taking over his responsibility for financial
stability.

Following is a who’s who of policymakers on the ECB’s
Governing Council, which sets policy and decides on interest
rates for the countries using the single currency.

The Governing Council consists of the six Executive Board
members, plus national central bank governors from each of the
16 euro zone countries.

The six Executive Board members are appointed by EU leaders
and are responsible for the day-to-day running of the
Eurosystem.

EXECUTIVE BOARD

JEAN-CLAUDE TRICHET

Born: Dec. 20, 1942, Lyon, France

In office since: Nov. 1, 2003

Term ends: Oct. 31, 2011

Title: President

Responsibilities on Executive Board: communications,
internal audit, secretariat and language services.

Background: As Bank of France Governor (1993 to 2003),
Trichet pressed for government budget discipline, fending off
politicians and top businessmen used to bossing the central bank
around. He also copied the German Bundesbank’s anti-inflation
policies. This won him market respect and brought credibility to
the French currency, earning Trichet the nickname “Ayatollah of
the strong franc”.

Trichet studied civil engineering and holds a master’s
degree in economics. He followed a traditional political career
after attending the elite Ecole Nationale d’Administration (ENA)
which has trained generations of French presidents, ministers
and civil service mandarins.

He rose to head the French Treasury in 1987 before becoming
Bank of France governor in September 1993. Trichet gathered
experience as an international financial policymaker during
those years, holding posts at the International Monetary Fund,
the World Bank and the Paris Club that coordinates sovereign
debt restructuring.

VITOR CONSTANCIO

Born: Oct. 12, 1943

In office since: June 1, 2010

Term ends: May 31, 2016

Title: Vice President

Responsibilities on Executive Board: financial stability and
administration

Background: Constancio headed the Bank of Portugal for 10
years before moving to the ECB, and developed a reputation as an
inflation dove who often emphasised the need for economic
growth.

A qualified economist, he has a background in politics and
started his public career as the budget secretary in the first
provisional government after Portugal’s leftist 1974 revolution,
and briefly served as finance minister in 1978. Constancio then
led the Socialist party in 1986-88.

Constancio also has experience in the private sector. Before
his Bank of Portugal appointment in 2000, he had held the post
of executive director in Banco Portugues de Investimento, now
known as Banco BPI (BBPI.LS) — the country’s third-largest
listed bank. Constancio graduated from the prestigious Lisbon
Technical University’s Superior Economics and Management
Institute.

JOSE MANUEL GONZALEZ-PARAMO

Born: Aug. 9, 1959, Madrid, Spain

In office since: June 1, 2004

Term ends: May 31, 2012

Title: Executive Board member

Responsibilities on Executive Board: banknotes, research and
market operations

Background: Gonzalez-Paramo is a budgetary hawk with a
reputation for economic orthodoxy and has strong academic
credentials. Until joining the ECB he divided his time between
the Bank of Spain, where he has been an executive board member
since 1998, and the Complutense University, where he has been
professor of public finance since 1988.

Gonzalez-Paramo has a doctorate in economics from New York’s
Columbia University, where he was a Fulbright scholar.

LORENZO BINI SMAGHI

Born: Nov. 29, 1956, Florence, Italy

In office since: June 1, 2005

Term ends: May 31, 2013

Title: Executive Board member

Responsibilities on Executive Board: International and
European Relations, legal services and the new ECB premises.

Bini Smaghi was seen as a pragmatist when he succeeded
fellow Italian Tommaso Padoa-Schioppa in 2005. An easy
communicator, he has a more approachable manner than is normal
for central bankers and is well known to Italian journalists.

Bini Smaghi has a doctorate in economics from the University
of Chicago and worked at the ECB in 1998 as deputy director
general for research. Before that he spent four years at the
European Monetary Institute, the ECB’s forerunner. There he was
in charge of preparing the ECB’s bank supervision, payment
systems and market intervention arrangements.

From 1998 to 2005 he was Italy’s finance deputy for the
Group of Seven industrial nations and vice president of a
committee which prepares the agenda for monthly meetings of euro
zone finance ministers.

GERTRUDE TUMPEL-GUGERELL

Born: Nov. 11, 1952, Kapelln, Austria

In office since: June 1, 2003

Term ends: May 31, 2011

Title: Executive Board member

Responsibilities on Executive Board: Human resources, budget
and organisation, payment systems and market infrastructure.

Background: Tumpel-Gugerell is a career central banker, who
joined the Austrian central bank in 1975, while also spending
stints at the IMF and as a government adviser. She holds a
doctorate in economics and social sciences from the University
of Vienna.

She became vice governor of the Austrian central bank in
1998. At the ECB she has been a passionate advocate of
integrating the European payment and financial systems.

JUERGEN STARK

Born: May 31, 1948, in Gau-Odernheim, Rhineland-Palatinate,
Germany.

In office since: June 1, 2006

Term ends: May 31, 2014

Title: Executive Board member

Responsibilities: economics, information systems and
statistics

Background: A forceful advocate of following Maastricht
Treaty rules, he argues for budget discipline and strict
adherence to price stability. He is viewed as an inflation
hardliner who helps keep the Bundesbank monetarist tradition
alive at the ECB.

Named Bundesbank vice president in 1998, he has broad
experience in international issues working as its advance man
for G7 meetings, works on the EU’s economic and finance
committee and sits on the ECB’s international relations
committee. He also sits on the Financial Stability Forum, which
monitors global financial risks.

Stark has a doctorate in economics and joined the German
economics ministry in 1978 and then the finance ministry before
he became a central banker.

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

Euro falls to 4-year low versus dollar

June 2, 2010 By Leave a Comment

June 1 (Reuters) – The euro fell to a 4-year low versus the dollar on Tuesday, as fears the euro zone debt crisis may spread to its banking system hit sentiment and as stop-losses were targeted.

The euro EUR= fell to $1.2116, its lowest level since April 2006. Traders said stop-losses from hedge funds were targeted under the previous low at $1.2143.

Technical analysts also highlighted the break below key support at $1.2135, the 50 percent retracement of the 2000-2008 rally in the single currency.

Filed Under: International News Tagged With: , , , , , , , , , , ,

Greek OPAP agents may strike at World Cup opening

June 2, 2010 By Leave a Comment

ATHENS, June 1 (Reuters) – Greek betting group OPAP’s (OPAr.AT) sales agents are threatening to strike over tax changes and exclusivity rules on June 11 and 12, the first two days of soccer’s World Cup, their head said on Tuesday.

The move highlights unrest triggered by Greece’s drastic belt-tightening to counter a debt crisis that has shaken the euro zone and undermined Europe’s single currency.

OPAP, which has a monopoly on sports betting and lotteries in the country until 2020, is 34 percent owned by the state. Its 5,000 Greek agents are the only ones allowed to sell its products.

Under a new tax regime decided as part of reforms aimed at plugging Greece’s fiscal gap, OPAP’s agents will now be taxed on their profits instead of paying a flat rate on their revenues. Agents say this will hurt their business.

They also demand fast-track parliamentary approval of an agreement signed with OPAP which will continue to bind the firm to its agents.

“We are planning a 48-hour strike during the World Cup,” the head of OPAP’s agents, Kyriakos Toptsidis, told Reuters.

“But if the two issues have moved forward by June 11, we might decide to call off the strike as a gesture of good will to find a way out,” he added.

The agents walked off their job during the Champions League soccer final in May in a strike expected to have cost OPAP up to 17 million euros ($20.83 million) in lost revenue. The betting firm made 5.44 billion euros in revenues in 2009. (Reporting by Angeliki Koutantou; Editing by Michael Shields)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

France pressing for euro zone leaders group-press

June 1, 2010 By Leave a Comment

May 31 (Reuters) – French President Nicolas Sarkozy is pressing his European partners to set up a group of euro zone leaders with a secretariat to act as an economic government for the single currency bloc, Le Monde said on Monday.

Currencies | Global Markets

“Nicolas Sarkozy is looking for ways to get Germany back into the European game,” the newspaper said in an article published on its web site.

“According to his entourage, the French president once again envisages the creation of a forum of heads of state and government from the euro zone, with a secretariat, which would be the true economic government of Europe,” it said.

The newspaper noted that Germany had already rejected similar proposals for a formal body to coordinate economic governance in the euro zone.

But it said Paris believed firmer budget commitments by euro zone governments and other concessions, such as approving Bundesbank President Axel Weber to succeed Jean-Claude Trichet as the head of the European Central Bank could help sway Berlin.

“If it judges that the guarantees that have been obtained are sufficient, Germany might accept the Eurogroup,” Le Monde said.

The newspaper said that French authorities were moving cautiously with the idea in order not to provoke any open rejection from Berlin.

“The French president has taken the precaution of not describing publicly the economic government which he envisages because a display of Franco-German disagreement could be fatal to the euro,” the newspaper said. (Writing by James Mackenzie; Editing by Charles Dick)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,

GLOBAL MARKETS-Euro inches up, stocks flat after China warning

June 1, 2010 By Leave a Comment

LONDON, May 31 (Reuters) – The euro steadied from recent falls and world stocks were becalmed on Monday with a Chinese warning about risks to global growth and a downgrade of Spain’s credit heightening investor caution in holiday-thinned trade.

Europe’s common currency inched up, recovering modest losses suffered after a cut to Spain’s sovereign debt rating late on Friday, but the currency remained on the back foot as the downgrade served as a reminder about the euro zone debt crisis.

Fitch cut Spain’s credit rating by one notch, saying its recovery will be more muted than the government forecast due to its austerity measures. The downgrade helped send Wall Street lower ahead of a three-day weekend. [ID:nLDE64R1ZE]

Analysts said the move had largely been priced in and Fitch still rated it higher than fellow agency Standard & Poor’s.

“It’s just a reminder that the euro zone crisis hasn’t gone away. It’s still lurking,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

By 0920 GMT, the euro EUR= was little changed on the day at $1.2300, pulling back from the day’s high of $1.2334 hit in early European trade.

The single currency looks set to end the month of May around 7.5 percent lower against the dollar as ongoing debt problems in euro zone countries have rocked confidence in the euro system.

A French government minister also said on Sunday keeping its top-notch credit rating would be “a stretch” without some tough budget decisions.

June Bund futures FGBLc1 were trading at 128.62, up 12 ticks from Friday’s settlement close. About 60,000 lots changed hands so far compared with a daily average of around one million lots seen this month.

German government bonds have been one of the main beneficiaries of investors seeking harbour from the euro zone debt crisis. The 10-year Spanish/German spread ES10YT=RREU10YT=RR widened about 3 basis points to 160 bps.

With market holidays in London and New York, investors needed few excuses to trade with caution but China provided another one.

Chinese Premier Wen Jiabao warned that global economic growth remained vulnerable to sovereign debt risks and the possibility of a second downturn, but said his own nation’s growth remained on track. [ID:nTOE64U03S]

STOCKS STEADY AT END OF BAD MONTH

Global equities measured by the MSCI All-Country World Index .MIWD00000PUS were absolutely flat on the day but the index is down nearly 10 percent this month, heading for its worst monthly loss since February 2009.

European shares .FTEU3 were up 0.2 percent with trading set to remain subdued.

BP’s shares fell more than seven percent at one point in Frankfurt after U.S. government and BP (BP.L) officials warned that the blown-out oil well causing an environmental disaster on the Gulf Coast may not be stopped until August. [ID:nN31222759]

Japan’s Nikkei average .N225 inched up for a fourth straight day of gains — ending 5.72 points higher.

There was little major market reaction to renewed political tension after Israeli commandos intercepted Gaza-bound aid ships on Monday and at least 10 pro-Palestinian activists on board were killed. [ID:nLDE64U01P]

But Turkish stocks dropped nearly two percent. Some of the ships in the convoy were carrying Turkey’s flag. [ID:nLDE64U0OR]

“This is very serious,” said Tera Brokers in a research note. “We are not sure how bad things could get; the event is definitely not market friendly as Turkish-Israeli relations are now in uncharted territory.”

Oil rose above $74 a barrel on Monday as the euro steadied, although worries about euro zone economic stability saw the commodity record its biggest monthly loss in 18 months. [O/R] (Editing by Stephen Nisbet)

Filed Under: International News Tagged With: , , , , , , , , , , , , , , , , , , ,
« Older Posts