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.

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