EUR/USD
Greek Prime Minister Lucas Papademos turns his attention today to finalizing next year’s budget, tackling a key demand set for the country to receive international financing a day after he won a confidence vote. Finance Minister Evangelos Venizelos will present the 2012 spending plan to the new cabinet for approval before it’s submitted to parliament for discussion by lawmakers, which he said could be this week. Demonstrators at the same time will gather in Athens to commemorate a student uprising today. “The policy of fiscal consolidation is necessary after the mistakes of the past several years to create the foundations for a new type of sustainable development,” Papademos told parliament yesterday. “The road is long and requires persistent effort and implies large adjustment costs.”Papademos, a former European Central Bank vice president, won a three-month mandate to implement budget measures and ensure a bailout of 130 billion Euros ($176 billion) agreed to with euro partners on Oct. 26. The first priority is to get a loan payment of 8 billion Euros by the middle of next month to avert a collapse of the financial system. A total of 255 lawmakers in the 300-strong chamber supported the confidence motion and 38 were against, Parliament Speaker Filippos Petsalnikos said yesterday. “Participating in the euro area means benefits and facilitates the adjustment of the economy, if of course the appropriate economic policy is followed,” Papademos said before the vote. “This is the truth, not blackmail.”
GBP/USD
U.K. stocks fell, erasing an earlier rally, as the Bank of England warned that the outlook for Britain’s economy has worsened and a report showed that unemployment increased the most since 2009.Standard Chartered Plc and Prudential Plc led banks and insurers lower. ICAP Plc lost 4.7 percent after reporting earnings. Energy companies paced advancing shares as crude oil rallied above $100 a barrel in New York. The FTSE 100 Index fell 8.42, or 0.2 percent, to 5,509.02 at the close in London. The gauge earlier climbed as much as 0.8 percent after the European Central Bank was said to have bought Italian bonds in larger-than-usual quantities. The FTSE All- Share Index slipped 0.1 percent, while Ireland’s ISEQ Index rose 0.6 percent. “The FTSE 100 endured another choppy and rollercoaster session after the Bank of England sharply revised growth forecasts, “said Joshua Raymond, chief market strategist at City Index. “Banks and insurance firms, the key areas of risk associated with liabilities to sovereign debt, are the two sectors that continue to see weakness.”The FTSE 100 tumbled as much as 1.2 percent after BOE Governor Mervyn King said Britain faces a “markedly weaker” outlook for economic growth and persistent danger from the euro area’s sovereign-debt crisis. “The prospects for the U.K. have worsened,” the central bank said in its quarterly inflation report. Based on its 275 billion-pound ($434 billion) bond-buying program remaining unchanged, inflation may fall below the central bank’s 2 percent target in two years. A separate release from the Office for National Statistics showed U.K. unemployment jumped in the third quarter by 129,000 to 2.62 million, the biggest increase since 2009.
USD/JPY
Gains in Japan’s bonds that drove 10-year yields to a 12-month low yesterday are outpacing global government securities for a second year as Europe’s debt crisis fuels demand for the haven of yen-denominated assets. The yield on the nation’s 10-year security reached 0.95 percent as the Bank of Japan cut its economic assessment, citing Europe’s crisis. Japan’s debt has returned 7.6 percent this year to investors who converted proceeds into dollars compared with 4.6 percent for an index of global counterparts, data compiled by Bank of America Merrill Lynch show. Japan’s currency has strengthened against all of its 16 major peers since the end of last year, increasing the allure of yen-based securities. An auction of five-year government notes this week showed the strongest demand in four months.“Japan’s bonds have low yields but offer the chance for modest capital gains, so investors can hold them with a sense of security,” said Daisuke Uno , chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., which manages the equivalent of $946 billion in customer deposits. “Because the yen is in an appreciation trend, currency gains can be also expected.”Japan’s entrenched deflation enhances the value of the fixed payments on debt, helping the government to borrow at low rates even as the decline in prices weighs on economic growth. The stronger currency hurts the competitiveness of exporters, threatening a recovery from March’s record earthquake. The nation’s government bonds in dollar terms returned 17.5 percent in 2010, compared with a 3.8 percent gain for global peers, the Merrill Lynch indexes show.
USD/CAD
Canada’s dollar erased gains as stocks declined after Fitch Ratings said the spread of the European debt crisis may threaten U.S. banks. Canada’s currency fell 0.3 percent to C$1.0245 per U.S. dollar at 5 p.m. in Toronto. Earlier it rose to C$1.0172. One Canadian dollar buys 97.60 U.S. cents. “We’ve weakened off as equities took a bit of a dive, “Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets, said by phone from Toronto.“Europe is still very much the touch point for risk, and the market is very nervous. With that come some facts and a lot of speculation.” The Standard & Poor’s 500 Index slid 1.7 percent, having earlier gained as much as 0.5 percent. Most of the decline came in the final two hours of trading. Canada’s benchmark Standard & Poor’s/TSX Composite Index dipped 0.5 percent. Unless the euro-zone debt crisis is resolved “in a timely and orderly” manner, “the broad credit outlook for the U.S. banking industry could worsen,” New York-based Fitch said today in a statement. U.S. banks have manageable direct exposure to stressed European markets in Greece, Ireland, Italy, Portugal and Spain, “but further contagion poses a serious risk,” the rating company said. The yield on 10-year Government of Canada bonds fell 3 basis points to 2.09 percent. The price of the 3.25 percent securities maturing in June 2021 rose 26 cents to C$109.92 after having declined as much as 10 cents.
Greek Prime Minister Lucas Papademos turns his attention today to finalizing next year’s budget, tackling a key demand set for the country to receive international financing a day after he won a confidence vote. Finance Minister Evangelos Venizelos will present the 2012 spending plan to the new cabinet for approval before it’s submitted to parliament for discussion by lawmakers, which he said could be this week. Demonstrators at the same time will gather in Athens to commemorate a student uprising today. “The policy of fiscal consolidation is necessary after the mistakes of the past several years to create the foundations for a new type of sustainable development,” Papademos told parliament yesterday. “The road is long and requires persistent effort and implies large adjustment costs.”Papademos, a former European Central Bank vice president, won a three-month mandate to implement budget measures and ensure a bailout of 130 billion Euros ($176 billion) agreed to with euro partners on Oct. 26. The first priority is to get a loan payment of 8 billion Euros by the middle of next month to avert a collapse of the financial system. A total of 255 lawmakers in the 300-strong chamber supported the confidence motion and 38 were against, Parliament Speaker Filippos Petsalnikos said yesterday. “Participating in the euro area means benefits and facilitates the adjustment of the economy, if of course the appropriate economic policy is followed,” Papademos said before the vote. “This is the truth, not blackmail.”
GBP/USD
U.K. stocks fell, erasing an earlier rally, as the Bank of England warned that the outlook for Britain’s economy has worsened and a report showed that unemployment increased the most since 2009.Standard Chartered Plc and Prudential Plc led banks and insurers lower. ICAP Plc lost 4.7 percent after reporting earnings. Energy companies paced advancing shares as crude oil rallied above $100 a barrel in New York. The FTSE 100 Index fell 8.42, or 0.2 percent, to 5,509.02 at the close in London. The gauge earlier climbed as much as 0.8 percent after the European Central Bank was said to have bought Italian bonds in larger-than-usual quantities. The FTSE All- Share Index slipped 0.1 percent, while Ireland’s ISEQ Index rose 0.6 percent. “The FTSE 100 endured another choppy and rollercoaster session after the Bank of England sharply revised growth forecasts, “said Joshua Raymond, chief market strategist at City Index. “Banks and insurance firms, the key areas of risk associated with liabilities to sovereign debt, are the two sectors that continue to see weakness.”The FTSE 100 tumbled as much as 1.2 percent after BOE Governor Mervyn King said Britain faces a “markedly weaker” outlook for economic growth and persistent danger from the euro area’s sovereign-debt crisis. “The prospects for the U.K. have worsened,” the central bank said in its quarterly inflation report. Based on its 275 billion-pound ($434 billion) bond-buying program remaining unchanged, inflation may fall below the central bank’s 2 percent target in two years. A separate release from the Office for National Statistics showed U.K. unemployment jumped in the third quarter by 129,000 to 2.62 million, the biggest increase since 2009.
USD/JPY
Gains in Japan’s bonds that drove 10-year yields to a 12-month low yesterday are outpacing global government securities for a second year as Europe’s debt crisis fuels demand for the haven of yen-denominated assets. The yield on the nation’s 10-year security reached 0.95 percent as the Bank of Japan cut its economic assessment, citing Europe’s crisis. Japan’s debt has returned 7.6 percent this year to investors who converted proceeds into dollars compared with 4.6 percent for an index of global counterparts, data compiled by Bank of America Merrill Lynch show. Japan’s currency has strengthened against all of its 16 major peers since the end of last year, increasing the allure of yen-based securities. An auction of five-year government notes this week showed the strongest demand in four months.“Japan’s bonds have low yields but offer the chance for modest capital gains, so investors can hold them with a sense of security,” said Daisuke Uno , chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., which manages the equivalent of $946 billion in customer deposits. “Because the yen is in an appreciation trend, currency gains can be also expected.”Japan’s entrenched deflation enhances the value of the fixed payments on debt, helping the government to borrow at low rates even as the decline in prices weighs on economic growth. The stronger currency hurts the competitiveness of exporters, threatening a recovery from March’s record earthquake. The nation’s government bonds in dollar terms returned 17.5 percent in 2010, compared with a 3.8 percent gain for global peers, the Merrill Lynch indexes show.
USD/CAD
Canada’s dollar erased gains as stocks declined after Fitch Ratings said the spread of the European debt crisis may threaten U.S. banks. Canada’s currency fell 0.3 percent to C$1.0245 per U.S. dollar at 5 p.m. in Toronto. Earlier it rose to C$1.0172. One Canadian dollar buys 97.60 U.S. cents. “We’ve weakened off as equities took a bit of a dive, “Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets, said by phone from Toronto.“Europe is still very much the touch point for risk, and the market is very nervous. With that come some facts and a lot of speculation.” The Standard & Poor’s 500 Index slid 1.7 percent, having earlier gained as much as 0.5 percent. Most of the decline came in the final two hours of trading. Canada’s benchmark Standard & Poor’s/TSX Composite Index dipped 0.5 percent. Unless the euro-zone debt crisis is resolved “in a timely and orderly” manner, “the broad credit outlook for the U.S. banking industry could worsen,” New York-based Fitch said today in a statement. U.S. banks have manageable direct exposure to stressed European markets in Greece, Ireland, Italy, Portugal and Spain, “but further contagion poses a serious risk,” the rating company said. The yield on 10-year Government of Canada bonds fell 3 basis points to 2.09 percent. The price of the 3.25 percent securities maturing in June 2021 rose 26 cents to C$109.92 after having declined as much as 10 cents.
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