Daily Market Report 28/11/12

Europe’s conveyer belt of problems

Having satiated Greece’s desperate need for their third tranche of bailout funds, the troika has hardly had a chance to reflect on the completion before the pressure mounts on the next task on its list.

Having strengthened throughout last week, the expectation of a bailout announcement, it appears, was already well priced into the market. Yesterday saw the euro weaken on the back of the news as investors looked ahead to other events on the horizon.

The next event on the conveyer belt of problems for euro leaders is the Spanish bailout. A Catalonian separatist movement, headed by Artur Mas, is distancing thoughts that an agreement would be reached at the start of the New Year. The underlying problem that plagues the euro zone is poor economic performance, in the form of recessionary problems and generally high unemployment, but these are problems that will persist well beyond the New Year.

Across the pond, the first murmurs of discontent about the progress to avert the fiscal cliff have reared themselves. As December rapidly approaches, the cliff countdown begins. It was hoped a deal may be thrashed out by now, or at least with some strategy outlined, however so far it has been fairly quiet.

Action will be required on both sides of the Atlantic, but whilst there isn’t any, there may be a risk-off sentiment that could drive some gains for the safe haven currencies.

 

Today’s Key Announcements:

  • All Day – EUR – German Prelim CPI: expected slightly down at -0.1%
  • 09.00am – EUR – Money Supply: increased to 3.9%
  • 15.00pm – USD – New Home Sales: expected at 387k