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FX Day Trading - 3 October 2011
Greece to miss deficit-reduction target
Will that scupper the bailout?
Probably not
The European Union is worried that overfishing threatens the survival of many species.
A recent report from Brussels said "too many boats continue to chase too few fish". Mindful of that concern, the EU paid out £2.8 billion in subsidies to the fishing industry in 2009.
In order to be scrupulously even-handed, it made sure the subsidies did not go only to member nations with access to the sea. Austria, Hungary, the Czech republic and Slovakia shared more than £20 million.
Such largesse has not gone unnoticed by Athens. The Greek government felt sufficiently emboldened yesterday to announce that it will miss the deficit-reduction target demanded as a condition of further bailout payments.
In 2012 it was supposed to achieve a budget deficit of no more than 6.5% of GDP; 6.8% now seems the best it will be able to manage. But never mind, say George Papandreou and his boys, if the EU is content to subsidise fishermen in Luxembourg and San Marino it surely would not begrudge the odd few billion to keep Greece solvent and the euro intact.
Although online spread betting investors are not totally convinced that the confidence in Athens is justified, they have not punished the euro too severely in the Far East this morning.
It is down by about half a yen and half a US cent from its position at the end of last week. The EUR/GBP spread betting market is unchanged from Friday's close.
But it is the US dollar that has come out on top once again, stronger by nearly two cents against the euro and half a cent against sterling compared with its opening level on Friday.
Only against the yen has the dollar failed to make progress. The threat of intervention continues to make investors wary of pushing too hard on the Japanese currency. For nearly a month it has been restricted to a one-and-a-half-yen range against the dollar, just below what had been the record dollar/yen low of April 1995.
For once, on Friday, the US economic data contributed to the dollar's success. Personal consumption expenditure rose by 0.2% in August, as expected.
The Chicago purchasing managers' index was up by nearly four points at a healthy 60.4 and the University of Michigan consumer sentiment index was three and a half points better at 59.4.
A 2.9% monthly fall for German retail sales was unhelpful to the euro. Higher-than-expected 3.0% inflation did the euro no good either; a rate cut from the European Central Bank still looks more likely than an increase.
Today is manufacturing PMI day. China went into an early lead with a small improvement to 51.2 while Australia surely guaranteed bottom position with a one-point fall to 42.3.
Switzerland, Germany and the United States are expected to deliver figures just above the breakeven point at 50 with Britain and the rest of Europe coming in a point or two below that level.
Of more interest to most spread betting investors will be the outcome of today's EU finance ministers' meeting. No breakthrough is likely but it will be interesting to see how they rationalise continued payments to Greece now the deficit-reduction target has been kicked into touch.
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The above content does not constitute investment advice, it is provided purely for information purposes and is delivered as a personal view of the writer. Neither the contributing company (or writer) nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the content.
'Euro Falls in Online Spread Betting Market on Greek Worries', Article by Moneycorp, last update: 3-Oct-11
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