EUR/USD
European Union banks must raise 114.7 billion Euros ($152.8 billion) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis. German banks need to raise an additional 13.1 billion Euros, Italian banks 15.4 billion Euros, and Spanish lenders 26.2 billion Euros in core tier 1 capital, the European Banking Authority in London said. The capital shortfalls include 15.3 billion Euros for Spain’s Banco Santander SA and 7.97 billion Euros for Italy’s UniCredit SpA. European leaders are demanding the region’s banks bolster capital to withstand write downs after they agreed to take losses on Greek bonds. The EBA estimated two months ago that the region’s financial institutions needed 106 billion Euros to increase their core Tier 1 capital to a target of 9 percent of risk-weighted assets by mid-2012, after marking their sovereign bonds to match market prices.“It looks as if the banks are running just to stand still,” said Matthew Czepliewicz, a banking analyst at Collins Stewart in London. “The backdrop has worsened, therefore banks in the interim have decided to lower their sovereign holdings and some have raised equity, so they’ve reacted and yet the aggregate number hasn’t changed much.”The Bloomberg Europe Banks and Financial Services Index fell 3.1 percent to 72.45 in London. Banks received financial support today from the European Central Bank, which coupled an interest-rate cut with a pledge to offer unlimited cash for three years in an effort to help banks avoid a liquidity crisis.
GBP/USD
Bank of England officials maintained their current round of stimulus as European officials hold a summit on the debt turmoil that Governor Mervyn King says is beyond his control. The Monetary Policy Committee voted to keep the target for bond purchases at 275 billion pounds ($432 billion), as predicted by all 39 economists in a Bloomberg News survey. It increased the target by 75 billion pounds in October and expects those purchases to be completed in February. King said last month there’s little point in “fine tuning” policy as officials watch to see how events play out. The European Central Bank cut interest rates today and euro-area leaders will start a two-day summit whose outcome could determine if any of the region’s members can keep a top credit rating with Standard & Poor’s. While King is holding fire on more stimulus, he introduced a new sterling liquidity measure this week to help banks weather any further escalation of a crisis that’s crimping demand and pushing up funding costs.“It appears the MPC is content to wait until February before committing to further asset purchases,” said David Tinsley, an economist at BNP Paribas SA in London. However, “there is some residual risk that they could go for more in January should market tensions escalate and the MPC considered some immediate monetary policy signal would be useful.”The Bank of England also left its benchmark interest rate at a record-low 0.5 percent today, as forecast by all 52 economists in a Bloomberg survey.
USD/JPY
Japanese securities watchdogs are seeking to punish Citigroup Inc. for attempted manipulation of the Tokyo interbank offered rate, Nikkei reported, citing unidentified sources. Regulators are examining whether employees at a Japanese unit of Citigroup, the third-biggest U.S. lender by assets, pushed banks to submit interest rates that would ensure that Tibor moved to the brokerage’s advantage, Nikkei said. The rate is calculated by compiling quotes submitted by major banks. The nation’s Securities and Exchange Surveillance Commission is urging the Financial Services Agency to penalize the Citigroup Global Markets Japan unit, Nikkei said. Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, declined to comment when reached by Bloomberg News. There was no answer to a call to a phone number listed on the commission’s website after normal business hours.Citigroup is part of a global investigation by regulators into whether some of the world’s biggest banks manipulated the interest rates at which they borrowed from each other. The U.S. Justice Department and the Securities and Exchange Commission may be investigating whether banks colluded to artificially reduce the London interbank offered rate, or Libor, a person with knowledge of the inquiry said in March.
USD/CAD
Canada’s dollar fell for the first time in four days on concern a lack of resolution for Europe’s debt crisis will slow global growth, sapping demand for higher-yielding assets. The loonie, as Canada’s dollar is also known, dropped from the highest level in a month against its U.S. counterpart and fell against most of the other major currencies after European Central Bank President Mario Draghi damped speculation that more purchases of euro-area bonds are imminent. Canada’s 10-year note yield fell to a record low of 1.979 percent as investors sought a refuge. “The realization gripped the market than it terms of liquidity, the central banks was there, but would do very little further in terms of funding or bond purchases that has weighed on risk assets as well as the Canadian dollar,” said Stewart Hall, senior currency strategist at Royal Bank of Canada in Toronto. “The market is looking for some signs of a credible fence to cordon off the crisis, and it didn’t get a heck of a lot from the ECB.” Canada’s currency depreciated 1.3 percent to C$1.0232 per U.S. dollar 5 p.m. in Toronto. One Canadian dollar buys 97.78 U.S. cents. The loonie earlier touched C$1.0052, the strongest level since Nov. 1. Yields on 10-year notes fell to a record low 1.979 percent, dropping as much as eight basis points, or 0.08 percentage point. The price of the 3.25 percent securities maturing in June 2021 increased 57 cents to C$110.81.
European Union banks must raise 114.7 billion Euros ($152.8 billion) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis. German banks need to raise an additional 13.1 billion Euros, Italian banks 15.4 billion Euros, and Spanish lenders 26.2 billion Euros in core tier 1 capital, the European Banking Authority in London said. The capital shortfalls include 15.3 billion Euros for Spain’s Banco Santander SA and 7.97 billion Euros for Italy’s UniCredit SpA. European leaders are demanding the region’s banks bolster capital to withstand write downs after they agreed to take losses on Greek bonds. The EBA estimated two months ago that the region’s financial institutions needed 106 billion Euros to increase their core Tier 1 capital to a target of 9 percent of risk-weighted assets by mid-2012, after marking their sovereign bonds to match market prices.“It looks as if the banks are running just to stand still,” said Matthew Czepliewicz, a banking analyst at Collins Stewart in London. “The backdrop has worsened, therefore banks in the interim have decided to lower their sovereign holdings and some have raised equity, so they’ve reacted and yet the aggregate number hasn’t changed much.”The Bloomberg Europe Banks and Financial Services Index fell 3.1 percent to 72.45 in London. Banks received financial support today from the European Central Bank, which coupled an interest-rate cut with a pledge to offer unlimited cash for three years in an effort to help banks avoid a liquidity crisis.
GBP/USD
Bank of England officials maintained their current round of stimulus as European officials hold a summit on the debt turmoil that Governor Mervyn King says is beyond his control. The Monetary Policy Committee voted to keep the target for bond purchases at 275 billion pounds ($432 billion), as predicted by all 39 economists in a Bloomberg News survey. It increased the target by 75 billion pounds in October and expects those purchases to be completed in February. King said last month there’s little point in “fine tuning” policy as officials watch to see how events play out. The European Central Bank cut interest rates today and euro-area leaders will start a two-day summit whose outcome could determine if any of the region’s members can keep a top credit rating with Standard & Poor’s. While King is holding fire on more stimulus, he introduced a new sterling liquidity measure this week to help banks weather any further escalation of a crisis that’s crimping demand and pushing up funding costs.“It appears the MPC is content to wait until February before committing to further asset purchases,” said David Tinsley, an economist at BNP Paribas SA in London. However, “there is some residual risk that they could go for more in January should market tensions escalate and the MPC considered some immediate monetary policy signal would be useful.”The Bank of England also left its benchmark interest rate at a record-low 0.5 percent today, as forecast by all 52 economists in a Bloomberg survey.
USD/JPY
Japanese securities watchdogs are seeking to punish Citigroup Inc. for attempted manipulation of the Tokyo interbank offered rate, Nikkei reported, citing unidentified sources. Regulators are examining whether employees at a Japanese unit of Citigroup, the third-biggest U.S. lender by assets, pushed banks to submit interest rates that would ensure that Tibor moved to the brokerage’s advantage, Nikkei said. The rate is calculated by compiling quotes submitted by major banks. The nation’s Securities and Exchange Surveillance Commission is urging the Financial Services Agency to penalize the Citigroup Global Markets Japan unit, Nikkei said. Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, declined to comment when reached by Bloomberg News. There was no answer to a call to a phone number listed on the commission’s website after normal business hours.Citigroup is part of a global investigation by regulators into whether some of the world’s biggest banks manipulated the interest rates at which they borrowed from each other. The U.S. Justice Department and the Securities and Exchange Commission may be investigating whether banks colluded to artificially reduce the London interbank offered rate, or Libor, a person with knowledge of the inquiry said in March.
USD/CAD
Canada’s dollar fell for the first time in four days on concern a lack of resolution for Europe’s debt crisis will slow global growth, sapping demand for higher-yielding assets. The loonie, as Canada’s dollar is also known, dropped from the highest level in a month against its U.S. counterpart and fell against most of the other major currencies after European Central Bank President Mario Draghi damped speculation that more purchases of euro-area bonds are imminent. Canada’s 10-year note yield fell to a record low of 1.979 percent as investors sought a refuge. “The realization gripped the market than it terms of liquidity, the central banks was there, but would do very little further in terms of funding or bond purchases that has weighed on risk assets as well as the Canadian dollar,” said Stewart Hall, senior currency strategist at Royal Bank of Canada in Toronto. “The market is looking for some signs of a credible fence to cordon off the crisis, and it didn’t get a heck of a lot from the ECB.” Canada’s currency depreciated 1.3 percent to C$1.0232 per U.S. dollar 5 p.m. in Toronto. One Canadian dollar buys 97.78 U.S. cents. The loonie earlier touched C$1.0052, the strongest level since Nov. 1. Yields on 10-year notes fell to a record low 1.979 percent, dropping as much as eight basis points, or 0.08 percentage point. The price of the 3.25 percent securities maturing in June 2021 increased 57 cents to C$110.81.
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