Daily Market Report 25/09/12

The perceived lack of progress in the euro zone is the root of frustration and uncertainty underpinning the markets at the moment. This is having a profound effect on other currencies as the shockwaves stem from the euro epicentre.

Officials trying to secure Spain’s bailout have become increasingly disillusioned with the Mediterranean nation’s reluctance to accept any financial help. Despite the faltering economic state of the country, Mariano Rajoy is unwilling to cede any political influence to the ECB

Instead the prime minister is going it alone, well aware that budget cuts and fiscal tightening is required, the framework for Spain’s future will be released in the nation’s 2013 budget on Thursday.

Meanwhile Greece continues to lag behind the tempo desired by the troika as it implements the necessary austerity measures required to qualify for its third bailout. The issue has caused French and German ministers to argue over whether or not the troubled nation deserves additional funding already.

This Franco-German rift continued as French president Hollande was left frustrated by the leisurely manner in which the procedure of establishing a joint banking supervisor has progressed at. Merkel, Hollande’s counterpart, errs on the side of caution, insisting that the implementation process will take as long as it takes to get it right.

A worse than expected business climate in Germany capped off a day with few things to cheer about as the euro continued to deteriorate against many of its major rivals. Should this trend continue, it is likely that the shared currency will see more volatility and losses against its counterparts. 

If, however, the 17 nation region finds rejuvenation, most likely in the form of a Spanish announcement, the euro could provoke an uptake in demand which would have knock on effects throughout the world, weakening the dollar, sterling and yen as investor risk appetite increases.

 

Key Announcements Today:
  • 09.30am – GBP – Mortgage Approvals – expected to remain constant at 28.4k
  • 13.30pm – CAD –Retail Sales – expected return to growth of 0.3% from -0.4%
  • 14.00pm – EUR – ECB President Draghi speaks
  • 15.00pm – CB Consumer Confidence – expected to increase

See previous Daily Market Reports