Forex Forecast – Voltrex

Dollar - Thursday saw the dollar gain against the euro and sterling, knocking the common currency off a two week high after forex traders as had second thoughts about the Greek austerity plans.  We also saw dollar sentiment lifted by a drop in the number of Americas filling new claims for unemployment benefits.  The figures where closely examined to give an indication of today US employment report.  There is widely varying estimates for lost jobs have persuaded forex traders to cool their heels, so today so far has been very quiet on the trading front.

Sterling – Yesterday saw the Bank of England offer sterling some support as the BoE left interest rates unchanged it has also decided against restarting it s bond buying program.

As Britain’s financial woes mount, one suspects that we may need a fresh line in chirpiness, because far from being sound, the sterling is looking softer than Mr Whippy in a heatwave. As forex traders wonder how honest the government is being in its pledge to slow the growth of state debt, the enthusiasm for holding sterling is dwindling.  And who can blame them?

Britain’s budget deficit, as percentage of GDP, is the worst in the G20, with total debt expected to reach 100% of GDP. A lower level for the sterling is not all bad news: exporters can sell goods and services more cheaply to overseas buyers, without having to slice into profit margins.  There are however, significant benefits attached to a devalued currency: the increased cost of importing material feeds into prices, which in turn makes it more likely the need of higher interest rates.

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Euro – The latest exchanges over Greece’s efforts to resolve its public deficit and debt crises appeared to undo some of the goodwill generated on Wednesday when Athens announced an additional set of austerity measures.  The euro fell against the dollar and to a lesser extent the sterling,  It seems the more vocal the Greeks are about everyone else bailing them out, the more pressure the pour onto the Euro.

Forex Forecast – Voltrex Fx

Sterling has nightmare day on political concerns

GBPUSD falls over 3.5 cents during morning trade

EUR/USD rally come grinding to a halt

Greek bond issue is postponed

US Dollar:

The Dollar continued to shine yesterday as markets resumed the flight to safety policy and traders poured out of both the Pound and the Euro in favour of the greenback. The US economic figures posted during the day were reasonably poor but it mattered not, FX traders had much larger concerns in hand such as the events going on across the pond in the UK and Europe. The dollar staged a remarkable rally against Sterling, stretching over 4 cents at one point during mid morning trade in London. As cable traders paused for breath just before lunch, the US trading desks fired up and duly sent EURUSD spinning 2 cents lower from 1.3650 to 1.3458 as the end of the month rally came crashing down in flames.

Other than risk aversion, the US Dollar may benefit from unem-ployment data due out this week with Non farm payroll being released on Friday and its private counterpart, ADP payroll being released on Wednesday.
Data— US Oil inventories (FEB), ABC Consumer Confidence (FEB) Total Vehicle Sales (FEB)

Sterling:

Sterling was hammered into oblivion yesterday as the Times raised the prospect of an early general election along side the very real possibility of a hung parliament. Although this may seem like a side issue, market par-ticipants are concerned that a hung parliament would reduce the ability of any ruling party to execute the wide range spending cuts which are needed to bring the UK ballooning deficit under control. At one stage the pound which had traded at 1.5247 on Friday evening, fell to 1.4784 before rallying. Against the Euro, it plummeted from a Friday high of 1.12 to a 3 month low of 1.0960 before recovering over the 1.10 level. It was sterling’s worst day since February last year and analysts warned it could sink further as the political uncertainty continues.

With Labour being required to hold an election before early June we do not expect the Pound to find any favour in the short term. Also weighing heavily on the UK currency was the announcement by the Prudential that they are to buy AIA, the Asian insurance arm of AIG for 35 billion USD.

As this will be primarily funded by UK investors, a few large GBP/USD trades will be carried out, putting further pressure on the Pound. With no eco-nomic data of importance out in the UK today or tomorrow, traders will be looking for the Bank of England interest rate setting meeting on Thursday to give them another excuse to sell, sell, sell.
Data— UK PMI Cons (FEB)

Euro:

The single currency had a mixed day yesterday, ascending over 2 cents against Sterling while giving up 2 cents against the Dollar. On the whole, the Euro was sold by traders as concerns over sovereign debt of its members and a general flight to safety took hold.

Rumours of an elite group of hedge funds, betting on the collapse of the single currency did nothing to help the situation. EURJPY is currently sat near its 12 month low and EURUSD break below 1.3460 will open the psychological level of 1.30. Any ongoing weakness could benefit the UK importers though as traders are looking for the pound to befit and move into the 1.16 to 1.20 level during the course of 2010.
Data– EUR Italian CPI MoM/YoY (FEB) EUR CPI YoY (FEB)

General: Australian central bank hike rates to 4% as inflation is on or close to target

UK banks see surge in bad debts. Institutions write off £4.12 bn in Credit card loans

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Forex Forecast – Voltrex FX

US Dollar – Investors are moving into safe instruments again as worries mount in Europe and the Fed speak about continued low interest rates in the US as world economies struggle with the financial recovery.  The issue that Greece’s debt problems could spread to Spain and other southern European countries, as make forex traders run for the safe haven currencies such as dollar and yen.

Morgan Stanley’s John Mack has stated that Greece has spooked the market and the firm expects EURUSD to end the year in the region of 1.25.

Sterling – A mixed day for sterling saw the pound hold its ground against the single currency but give up all the gains it made against the dollar last week.  A run for cover in the forex markets saw funds flow out the pound and euro to the the safe haven currencies.  Against the euro, we did see some support around the 1.14 mark as the euro currency continues to battle with it s own demons.  We had the RBS bank figures which somehow a £3.5bn loss for 2009 compared to £24 bn it lost in 2008.

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Euro - The Euro took another hit against the dollar and has continued to be agrressively sold off in this mronings trading session. Greece in weighing on investors minds as thousands of people took to the streets in Athens, to protest against the austerity measures aimed at ending the crisis.

The Euro looks like it is doomed to fall further this year, though there might be a short term reprieve.

Cracks seemed to be appearing in the Eurozone as the Deputy Prime Minister of Greece said that Germany had no right to reproach Greece for anything after it devastated the country under the Nazi occupation.  As far as we can see, not a clever way of asking your biggest financial backer to help you out in the hour of need.

Forex Forexcast – Us Dollar gives back some of it s gains in a correction

Forex Forecast – US Dollar

The dollar encountered some selling pressure yesterday but has weaken from its multi month highs against the majors. Cable has recovered from its massive drop last week to reach a high of 1.5529 this morning before reversing.   Forex Market feeling is still very dollar positive and we expect these moves to be a correction / profit taking rather than a reversal of trend.

Data is very light in the early part of the week so we are expecting Dollar Bulls to look for Bernanke monetary policy testimony on Wednesday for fresh reasons to go long dollar.

Forex Forecast – Sterling

Sterling had a mixed bag during the sessions yesterday, gaining a cent on the dollar from Friday’s low. With concerns over both the UK and certain member’s of the Eurozone soverign debt levels it is difficult to predict who will come worse off so the EURGBP will probably remain in a tight range  until the situation becomes clearer.

Another story hurting Sterling yesterday was the possibility of a hung parliament at the next general election. Any loss of control would weaken the governing part’s ability to execute wide spread spending cuts and bring our deficit under control.  This of course si of concern to the rating agency’s, who asses our ability to repay our debts and ultimately how much it cost the UK to manage its finances.

Forex Forecast – Euro

The euro recovered some ground before dropping again this morning.  As per the comments on the dollar, this is a technical correction rather than a change in trend. The forex market is awaiting the Greek bond sale later this week to gauge the market sentiment on the sovereign debt crisis.

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Forex Forecast – Voltrex

Greek rescue plan agreed by EU leaders but “strangely thin”

Lack of confidence in the Greek bail out see’s the euro aggressively sold

Weak euro sees Sterling rally to push GBP/EUR up by 2cents

Dollar makes huge gains on euro but falls against the sterling

Commodities fall on market jitters

EURUSD Hourly Forex Chart

Forex Forecast – US Dollar:

The dollar had a game of two halves yesterday as it took full advantage of a fall in the value of the euro, but then traded lower against the sterling. The ongoing story of debt worries in Europe continued to take the headlines, with no detail being released of how the European Union was going to bail out Greece. On the back of this we saw the dollar take over two cents off the single currency to trade below the $1.36 level. Against sterling we did see a reversal of recent dollar strength as the greenback gave up over a cent on the sterling. US stocks climbed Thursday after Caterpillar, Intel and Chevron posted gains as better than expected US jobs data and a moderation in China’s consumer-price inflation prompted investors to move back into growth-sensitive areas, including commodities. A gain in risk appetite saw the dollar sold off with sterling taking full advantage.

Data 14.55: U.of Michigan Confidence 74.8 from 74.4.

Forex Forecast – Sterling: Yesterday was a day for the sterling to sit back and let the currency markets fight between themselves, with sterling coming out on top of the majors. Currency analysts watched the sterling rally, first against a battered euro, and then against the dollar. Over two cents was gained against the euro, to push GBP/EUR over the 1.15 level and this has continued rising into this mornings trade. The main story was the ‘will they won’t they’ saga of when and how the European Union was going to bail out Greece from its financial woes. Well, the statement came out that they would, but there was no detail of how they were going to do, leaving currency players no option but to continue the trend of selling the single currency. Against the dollar, sterling had a bit of a late rally, as cable didn’t really move until the US trading session, where after some positive US economic data was seen, some risk came back into the market and the dollar was sold off to the benefit of a grateful sterling. Cable took over a cent off the US currency to push GBP/USD over the 1.57 level.

No major data.

Forex Forecast – Euro: The single currency didn’t react positively yesterday after Europe’s lukewarm response to Greece’s fiscal mess, leaving uncertainty clouding the investment atmosphere. Investors were disappointed that details of any European rescue plan for Greece remained extremely elusive. Comments from the European Council included “Money will not be put on the table for the foreseeable future. And the weak figures from Spain show that this is a problem that is spreading fast. Greece is to submit an update on its deficit reduction progress in March and investors suspect that any serious rescue effort wouldn’t take shape until that report is delivered. Subsequently the euro was aggressively sold off in the currency markets, giving up a whopping two percent against the sterling and close to a couple of cents against the dollar. Investors think the euro will remain under pressure until some concrete measures emerge from European leaders to pull Greece out of its fiscal troubles. Data: E/Zone Industrial

Production MoM 0.1% from 1.0%. E/Zone GDP QoQ 0.3% from 0.4% & YoY –1.9% from –4.0%.

General:

Oil prices are lower Friday on investor concerns the European Union’s pledge to help Greece deal with a crippling debt crises lacked details, with New York’s main futures contract falling to $74.89 per barrel.

Gold also fell to $1089.20 on the back of the troubles in Europe with a $3.40 drop from New York’s close

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Forex Forecast – Voltrex FX

Dollar rallies to 8 month high against the euro and sterling on risk aversion

Euro still facing huge pressure from majors on mounting debt worries

Sterling mixed – holds ground against euro but collapses against the buck

Gold trades at $1,065.70, up $13.50 from Fridays close, Oil at $71.68/barrel

Dubai World prepares for a firesale—QE2 and Cirque du Soleil may go!

Forex Forecast – US Dollar: The dollar is riding the risk aversion wave at present, with little surprises coming from the weekend meeting of the Group of Seven nations in Canada, the focus remaining on fiscal issues bedevilling some of the European nations. There was no tough talk on currencies, and no official statement as the G-7 forum now defers to the G-20 as the main global forum for joint policy statements. The debt problems facing Greece, Spain and Portugal will remain a concern for markets, with investors running for cover in the form of lower yielding currencies such as the yen and dollar. This saw the mighty buck reach such dizzy heights against the euro and sterling, not seen since mid-May last year. We saw $1,3584 hit against the battered euro and $1.5535 reached against the sterling. There was a small fight back in US stock markets after Europe closed much lower, but Asian stock markets have now dropped as well, with the Nikkei falling below the physiological 10,000 level. It looks like the dollar will remain strong as long as investors remain sceptical about how Europe is going to fix what is now becoming not just a Greek problem, but a European problem. No major data.

Forex Forecast – Sterling: Sterling is between a rock and a hard place at present, despite having its own currency to try to help battle its way out of recession. The fact we are so close to the Eurozone, and its problems with how to manage its mounting debt levels on some states, is having a detrimental effect on the value of the UK currency. This is just one or the reasons for the dramatic demise in cable, as the sterling has now hit an eight month low against a rallying dollar. The perception is that the UK could be dragged into the mix. We all saw what happened when there was a run on the banks, and a similar situation is not completely out of the question with a country suffering a similar fate. Against the euro however, sterling is looking to hold its ground, as the single currency wobbles under the mounting pressure in global markets. We have seen a cent given up however since the end of last week, as GBP/EUR struggles to stay above the 1.14 level. Looking ahead to this week, we have the BoE’s quarterly inflation report which may give the market the first glimpse of any revision the MPC has made to its two-year inflation projections. Among the macro-economic data due in the week, UK manufacturing output likely grew on month in Dec—a development that could mean an upward revision to the fourth quarter GDP reading.

Forex Forecast – Euro: The euro sank Friday as sovereign debt weighed heavily on markets, with investors focused on fiscal issues in deficit-laden Greece spreading to Portugal and other euro-zone economies. We have already seen the single currency fall dramatically to $1.3584 against the dollar, an eight month low, with some analysts calling an even steeper decline to $1.30 a possibility, as investors weigh whether belt-tightening plans in Greece, Portugal and Spain will stop a possible contagion from infecting the entire eurozone. Even against sterling, the euro has seen continued weakness, although there was some ground made from Friday’s close with just under a percent taken back to leave EUR/GBP trading at 0.8771.

Data 09.30: E/Zone Sentix Investor Confidence expected at –2.7 from –3.7.

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General:

Spot gold is at $1,065.70 a troy ounce, up $13.50 from New York trade Friday. While the yellow metal hasn’t yet been sought as a safe haven, if the uncertainty on eurozone debt crises continues, it will be positive for gold.

Debt laden Middle Eastern conglomerate Dubai World is preparing a fire sale of some of its most prestigious assets including the cruise liner QE2 and circus troupe Cirque du Soleil.

Dollar and Yen Surge as Dow and Risk Appetite Collapse

Non Farm Payrolls set to show an improvement in job figures

ECB Rate Decision to Focus on Surge in Credit Risk for Greece

Sterling Finds Little Stability as BOE Holds on Rates

Commodities Price Plunge on Dollar Strength

Forex Forecast – US Dollar: Both the US dollar and Japanese yen responded to the dramatic plunge in market-wide risk appetite overnight by falling back on their role as safe havens currencies. While the yen crosses were perhaps more volatility in their declines, the greenback was the more influential currency owing to its prevalence as the world’s primary reserve asset. The dollar index rallied to highs not seen since July and EURUSD tumbled nearly 180 points to close well below 1.3750. Looking at a higher frequency chart of most of the major pairs, it was clear that the dollar’s strength was surprisingly consistent. It will be interesting to see what happens today after the Non farm Payrolls data is released.

DATA : Average hourly earnings and Treasury’s Geithner Attends G-7 Meeting in Iqaluit, Canada

Forex Forecast – Pound: Though the target lending rate was left unchanged at 0.50 percent, the decision to pause the bond purchasing program was the first step towards neutrality for this massive stimulus policy since its inception in March. Is this the first step towards an official rate hike?. While capping stimulus programs is an essential first step towards tightening the reins; the United Kingdom has a long way to go before the economy is well enough in its recovery that support can be removed. Further bond purchases would be made if it were necessary – pointing to a wait-and-see approach as they balance near-term inflation and the pain of a ballooning deficit. Furthermore, the BoE is unlikely to make big changes before the general election.

DATA : Producer price index input and output

Forex Forecast – Euro: While the euro is typically jostled by the indirect influences of the US dollar and that benchmark’s own response to underlying risk trends; the currency found its own fundamental momentum today. The market was patiently awaiting the ECB’s official decision on interest rates and President Trichet’s regular commentary following the announcement. As expected, the policy authority left the benchmark unchanged at 1.00 percent; and the lead policy regulator would offer few concrete comments on a timeframe for the eventual change from a neutral to hawkish bearing. On the other hand, there were highlights. Once again Trichet signaled rates were “appropriate” and he suggested that draining liquidity was the first option when inflation pressures started to appear. The more appropriate topic though was his vote of confidence that Greece’s plans to reduce its deficit would work. The market clearly did not share this point of view when credit default premiums on sovereign debt from Greece, Portugal and Spain among others surged on the day. Making matters worse, Greece’s second largest union approved its second mass strike this month. Warnings that the EU is on the verge of anarchy are premature; but these problems will not soon disappear given the state of the member economies and the rules they are bound by.

DATA : German Industrial Production

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General:

Commodity prices plunged on Thursday as debt problems in major European countries sent the dollar higher, while US weekly jobless claims raised demands. Hardest hit was gold losing its bullish momentum and shedding US$45 dollars.

Forex Forecast – Voltrex FX

BOE expected to keep benchmark rates on hold

US payroll figures set for an improvement

Euro drops below $1.4 in overnight trade

Euro falls versus dollar after Greek finance plan

Aussie dollar stays steady while the Kiwi takes a tumble

Forex Forecast – US Dollar: The dollar picked up fresh momentum on Wednesday after a stronger than expected private payrolls survey suggested the US labour market is closer to a turning point that could boost the economic recovery. The survey by payrolls firm ADP showed that US job losses narrowed to 22,000 in January, better than the consensus forecast of 30,000. This boosted hopes that official data on Friday would show a gain in overall US payrolls with consensus forecast calling for a rise of 15,000 jobs which could help the struggling US economy regain momentum. The dollar took two cents off the sterling to hit 1.5874 and 1.5 cents off the euro to trade at 1.3848.

DATA : Chain store sales

Forex Forecast – Sterling: The BoE is widely expected to leave their benchmark rate unchanged at their policy meeting, but markets will be focusing on their intentions for their asset purchase program. The central bank has exhausted the 200 billion which has been approved to this point leaving some to speculate that they could officially bring an end to their quantitative easing efforts. The hawkish action would be the first step toward tightening for the MPC which could generate a bullish sterling reaction. However, adding to their efforts or merely pausing would signal that liquidity concerns remain and tight credit markets continue to threaten the economy’s recovery. Outside of the typically bearish implications, prevailing concerns over the country’s credit rating could add weight to any negative sterling sentiment. This outcome would support the bearish technical outlook for the GBP/USD and justify a short position.

DATA : BOE interest rate decision, BOE Asset Purchase Target

Forex Forecast – Euro: The euro slipped below $1.39 overnight as a better-than-expected report on U.S. jobs and persistent worries about government debt in Greece and elsewhere in Europe combined to support the dollar. The 16-nation euro bought $1.3869 in morning European trading, down from $1.3905 in New York late Wednesday. The sterling slipped to $1.5872 from $1.5901. Both the European Central Bank and the Bank of England deliver their monthly interest rate decisions later Today. The euro has been buffeted by mounting concern about the debt loads being carried by Greece, Portugal and Spain, all of which use the euro. On Monday, the euro dropped to $1.3854, its lowest point since mid-July. The European Union said Wednesday it would back Greece’s plan to shrink its massive deficits and warned it would demand tougher cutbacks.

DATA : ECB Interest rate decision, ECB President Trichet holds Press Conference

GENERAL:

The Aussie dollar was broadly steady on Thursday after blipping higher as the New Zealand dollar tumbled on a jump in unemployment and the Australian dollar slipped on data showing a dip in monthly retail sales.

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Forex Forecast – Voltrex FX

EUR/USD falls to 7 month lows

GBP PMI survey is highest for 15 years

DJIA holds 10,000 and FTSE posts positive close

Eyes on Central Bank meetings with BOE, ECB

Forex Forecast – US Dollar: The US currency finally halted its advance against the other majors as the glimmer of the return of some risk appetite to the market. Following the violent collapse in GBPUSD to multi month lows of 1.5854 and EURUSD to 1.3850 in early morning Asian trade, the green back stopped for breath and weakened to yesterdays close at 1.5948 and 1.3918. Although this could be just a technical correction before the downward trend is resumed, any advance by the dollar will be kept in check should equity markets return to positive territory. The DJIA has found physiological support at the 10,000 level and was boosted by the January ISM report, showing the strong-est figure since 2004. Markets will now be anticipating Fridays Non Farm Payroll data, after last months disappointment, positive figure and a possible upwards revision could see risk appetite rise and the dollar resume its downwards trajectory.

Data – USD Pending Home Sales MoM (Dec) ABC Consumer Confidence (JAN)

Forex Forecast – Pound The British pound was perhaps the biggest move on the day; but the currency’s activity wouldn’t take a straight path. Sterling’s recent alignment to risk aversion flows proved a fundamental weight as the sentiment improved market-wide. The UK currency was also helped by a great figure from the January UK PMI survey registering a 15 year high, giving a much needed boost to the UK economic picture. Speculation that the Bank of England will finally bring to an end its bond purchasing programme (Quantitative easing) on Thursday when the bank convenes for its monthly rate setting meeting will heighten rumours of a rate rise and should lend support the pound. Of course an unexpected extension of QE would have a massive negative impact and we would expect GBP/USD and other sterling based pairs to fall heavily on the back of this.

Data – GBP Purchasing Managers Index Construction (JAN)

Forex Forecast – Euro: The Euro found some support against its US and UK counterparts although we suspect this to be a technical correction and some profit taking. Euro Bears are still circling the Greek debt crisis but with no real develop-ments, it appears that once again the media has overplayed the situation and the risk to the Euro Zone. On the other hand, should Portugal, Ireland and Spain be cast in the same light, Club Med as its know could have a serious and long lasting impact on the global markets. The Euro data docket is full this week with Producer prices, Retail sales and factory orders but we feel future direction will be taken from the monthly ECB interest rate meeting on Thursday and underlying risk appetite.

Data— EUR Producer Price Index MoM/YoY (DEC) GER Retail Sales MoM/YoY (DEC)

General:

Obama releases $3.8 trillion fiscal budget for 2011, pushing the 2010 and budget to a record $1.6 trillion. Rating agencies say they are unconcerned but the hole for the US to dig them selves out of is worryingly large Aussie Dollar drops over one percent against other majors as the RBA unexpected hold the base rate at 3.75%

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US dollar extends gains against majors after strong GDP data on Friday

Sterling down on euro after bearish comments on economy by Osborne

Groundhog day for cable – sterling posts another 1.5 cents loss on dollar

Euro posts 7 month low against a rallying greenback

ECB & BoE expected to leave interest rates unchanged this Thursday

Forex Forecast – US Dollar: A rallying dollar has continued into a fresh week after strong US economic data posted on Thursday and Friday saw the buck move higher against its major rivals. US durable goods orders on Thursday and GDP data seen Friday came in much stronger than expected, buoying the greenback to trade higher. In fact, the GDP number came in at a eye watering 5.7%, much higher than the 4.5% figure expected. The confirmation of Ben Bernanke’s reappointment of the Federal Reserve also helped strengthen the dollar. The buck posted a 7 month high against an under fire single currency as $1.3850 was seen in early morning Asian trade. Cable also saw continuing losses as three cents went in the buck’s favour to hit $1.5936. Data 13.30: Personal Income 0.3% from 0.4% & Personal Spending 0.3% from 0.5%. 15.00: ISM 55.6 from 55.9. Speakers: Geithner.

Forex Forecast – Sterling: Sterling saw the week out on a negative footing as the UK currency posted a small loss against the euro, alongside the continuing slide against the greenback. Groundhog day was seen in cable after Friday mirrored Thursday’s trading pattern. As soon as the US data was released, cable got battered and money flowed back into the US currency. This saw another 1.5 cents lost in cable on Friday, on top of Thursday’s losses. The sterling didn’t have much fight left in it which has continued into this morning’s trade. Comments by the Shadow Chancellor George Osborne didn’t help after he stated the UK is at risk for a deficit crises similar to Greece, with the UK Business Secretary retaliating with Mandelson saying Osborne was ‘ludicrous’ in comparison of the UK to Greece. This saw sterling fold against the euro with over 1.5 cents given up from Thursday, after hitting a five month high of 1.1625 on Thursday. Looking ahead to this week, interest rates are expected to be left unchanged at the ultra low rate of 0.50%, but the MPC is set for a split vote on whether to extend its controversial £200bn programme of QE. The city expects that a majority of the MPC will vote to pause the programme, with the proviso that it could be extended later if necessary. Though last weeks GDP figures for Q4 of 2009 showed only a 0.1% rise, the Bank expects them to be revised higher. Data 09.30: Mortgage Approvals 61.8k from 60.5k, Net Consumer Credit –0.4B unchanged & PMI53.9 from 54.1.

Forex Forecast – Euro: The euro finished off the week mixed, with yet more losses posted against a strong dollar, but a small gain made back on sterling. It seems the Eurozone isn’t on its own with the continuing threat of how to pay off its rising debt. The UK is also in the spotlight of how to get a grip of its worrying debt levels. The concerns for the single currency though is still against the greenback, as stories continue to hit the wires surrounding the Southern European states of Portugal, Ireland, Greece and Spain. Pressure may mount on counties like Germany, which could face a dilemma. Either Europe’s paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury and debt union, or the euro will start to unravel, and with it Germany’s strategic investment in the post-war order. The spike in yields on 10-year Greek bonds to 400 basis points above German bunds has been shockingly swift—a warning to Britain, too, that markets can suddenly strike any country that takes creditors for granted! No major data.

General:

The Reserve Bank of Australia is expected to raise its interest rates to 4.00% from 3.75% tomorrow.

Leaked documents have revealed Brussels will publish a plan for Greece this week, under the headline “Urgent measures to be taken by May 15tth, 2010”. Greece has been under pressure from international investors over fears it will default on its debt.

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