Italy sold 7bn euros ($9.3 bn) of 1-year bonds or the maximum planned amount for auction. Borrowing costs for the country declined as PM Mario Monti’s parliament approved 30 bn euro austerity and growth plan. The yields for 1-year government notes dropped to 5.952% compared to 6.087% at previous auction on November 10.
US unemployment rate dropped less than firing rate indicating that companies still lack confidence to employ new workers. In November jobless rate has dropped to 8.6% from 10.1% in October. In contrast applications for jobless allowances have declined 40%. Julia Coronado, BNP Paribas North America chief economist suggests that absence of demand in economy drives a wedge between unemployment rate and jobless claims.
UK’s FTSE 100 lost 0.5% on Monday as investors became sceptic whether the measures proposed by EU leaders during the summit will manage to solve the debt crisis. Financials and mining companies pushed on the UK benchmark index most heavily. Royal Bank of Scotland Group PLC plunged 4.7% after Financial Services Authority reported that various factors nearly destroyed the bank during 2008 financial crisis. Lloyds Banking Group PLC shares fell 6.7% while HSBC Holdings PLC edged down 1.7%. Miners BHP Billiton PLC and Rio Tinto PLC dropped 2% and 1.5% respectively.
Official SNB exchange rate for EUR/CHF is at CHF 1.2331 today; 3-month LIBOR CHF remains at 0.05% (within target range of 0.00-0.25). Yields for 10-year Swiss Confederation bonds remained at 0.81% today. SMI stock index has lost 0.29% since opening bell, and is currently fluctuating around 5776 points.
Japan decided to extend its tax breaks on fuel-efficient cars in an attempt to support its domestic car production. The tax breaks had to expire in April 2012 but now they are prolonged until April 2015. Domestic vehicle production was impacted by natural disasters as well as the strong yen and the new measure is likely to bolster the growth of the sector.
Daily maximum: 1.3377
Daily minimum: 1.3230
The market forecast mean at 1.3371 was touched today though the pair erased earlier gains as the European financial agreement made last Friday did not convince investors. Daily Resistance: 1.3450; 1.3518; 1.3602. Daily Support: 1.3298; 1.3214; 1.3146. Daily Bias: Neutral.
Daily maximum: 103.86
Daily minimum: 103.09
The common European currency inched lower today, crossing the daily target at 103.83 as investors voted ‘thumbs-down’ to the EU deal on financial compact. Daily Resistance: 104.48; 105.07; 105.74. Daily Support: 103.22; 102.55; 101.96. Daily Bias: Neutral.
Daily maximum: 1.5657
Daily minimum: 1.5538
The British pound moved its bearish trend as the UK Prime Minister David Cameron refused to support the financial pact the rest of the EU members agreed on, making investors anxious on the prospects of Europe and leaving the daily forecast mean at 1.5663 intact. Daily Resistance: 1.5739; 1.5811; 1.5889. Daily Support: 1.5589; 1.5511; 1.5439. Daily Bias: Neutral.
Daily maximum: 77.99
Daily minimum: 77.58
The American dollar returned to the 77-78 price range as investors remain concerns over the European long-term economic prospects, piercing the daily consensus at 77.63. Daily Resistance: 77.78; 77.92; 78.07. Daily Support: 77.49; 77.34; 77.20. Daily Bias: Neutral.
Daily maximum: 0.9338
Daily minimum: 0.9249
USD/CHF is trading higher after the Swiss economy posted a 4.05M employment level – higher than expected, causing investors to move from safe-haven to riskier assets. The forecast mean at 0.9231 remained untapped today. Daily Resistance: 0.9282; 0.9334; 0.9385. Daily Support: 0.9179; 0.9334; 0.9385. Daily Bias: Neutral.
Dukascopy is persisting to find out more about the rating agencies that are often blamed for the failure to predict the financial crisis of 2008. As they are said to play a significant role in the ongoing European debt crisis, we have asked an expert in Economics, Professor of New York University, author and editor of a number of books on economics; Lawrence White, to give his evaluation of the matter.
Amid the debt crisis in the Eurozone, Sweden enjoys its Krona’s appreciation combined with the 4. Dec decision by S&P to upgrade the rating of Swedbank, the leading retail bank in Northern Europe, to A+ from A, signaling high level of bank’s stability. Our expert from Uppsala University, Professor Ali Sina Önder, has shared his view on the strength of SEK, its difference from CHF and the potential breakdown of the Eurozone.
Euro zone fiscal pact fails to restore confidence
A European summit deal to strengthen budget discipline in the euro zone failed to restore financial market confidence on Monday, forcing the European Central Bank to step in again gingerly.
U.S. Growth Is No Deterrent for Rally in Treasuries
The strengthening U.S. economy is proving no deterrent to the biggest rally in Treasuries since 2008, and America’s largest bank says it may get even better for bond investors.
Australia’s Trade Surplus Narrows in October
Australia’s trade surplus narrowed by more than expected in October as imports outpaced a flat export performance, and further slippage looms as Europe’s crisis hits trade finance while China’s red-hot growth cools.