European Central Banks take firm measures to act; Draghi hints at Eurozone aid plan

President Mario Draghi of the ECB indicated that central banks should take firmer measures to tackle the crisis in the EU, which is dependent on leaders in the member states reaching agreement. Agreement from member states would symbolise a growing trend towards economic integration and could result in a reduction of national deficits. This would be an important step in curtailing market contagion which is predominantly responsible for the volatility seen in the Eurozone. The sovereign debt crisis in recent months has become highly political and the responsibilities of the ECB, IMF and respective country leaders have also become increasingly blurred.

Aggressive French and Spanish bond purchasing yesterday was testament to co-ordinated global efforts of reduced central bank liquidity costs throughout the week, highlighting that political cohesion can significantly benefit the crisis.

In other markets, the US defied economic predictions identified an increase in the manufacturing index, whilst Chinese, UK and European manufacturing industries declined.

Economic Data

  • UK PMI Construction (Nov) is expecting a lower reading compared to its previous reading of 53.9. 
  • United States Unemployment rate shows a flat rate of 0% from the consensus level of 9%, however the rate being up indicates a lack of expansion within the US economy.
  • United States Average Hourly Earnings (YoY) (Nov) is predicting a minor increase of 1.8% to 2.0% by the consensus, showing a positive impact on the market. 
  • United States Nonfarm payrolls show an increase from 80k to 119k, revealing a positive impact of the number of people on the payrolls of all non-agricultural businesses.
  • EMU Producer Price Index (YoY) (Nov) has a lower reading of 0.1% from the consensus, compared to its previous reading of 0.3%. This is due to the federal reserve board paying closer attention to when interest rates are set, which is influenced by labor cost inflation and the tightness of labor markets. 
  • Switzerland Real Retail Sales (YoY) (Oct) is up from -0.9% to 1.2% by the consensus, indicating an increase in consumer demand.

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