Overnight the aussie managed a sustained break of parity and the euro is currently trading below the 1.3000 level. Clearly the markets are becoming frustrated with the slow progress of European officials in dealing with the euro debt crisis. German Chancellor Merkel did not help the situation when she spoke to the bundestag, reiterating that there is no quick solution to the crisis and it could last for years.
Themes:
• The sell-off in risk overnight has stabilised during the first part of the session, with a lot of traders in region likely staying on the sidelines. This is not surprising given the amount of chatter coming from Europe, which leads to significant price volatility whilst Asian traders are sleeping.
• Early this morning Fitch downgraded five European banks one notch, including Banque Federative du Credit Mutuel, Credit Agricole, Danske Bank, OP Pohjola Group and Rabobank Group.
• Merkel’s comments did not help investor sentiment. Besides the warning comments, she also stated that Europe has embarked on an irresversible process to fical union.
• According to Bloomberg, Fed President Bernanke told a closed session of Republican senators that he will not be providing aid to help Europe deal with its debt crisis.
• The SNB is holding its policy meeting today at 9:30 local time. Given how much conditions have deteriorated since their last meeting, we could see some more stimulus. Nevertheless, if they decide not to move the floor, we expect them to keep the threat alive.
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Asia Open: Indecisiveness From the EU is Destroying Risk
Published 12/15/2011, 06:10 AM
Updated 05/18/2020, 08:00 AM
Asia Open: Indecisiveness From the EU is Destroying Risk
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