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FX Day Trading - 25 November 2011
Bundeskanzlerin sagt Nein
No eurobonds
No large-scale ECB bond purchases
No progress
The various UK economic factions are at odds as to how best to help the economy.
The government wants to subsidise employers to hire teenagers, so reducing youth unemployment. Private sector firms want to see lower taxes and less red tape. The public sector unions have adopted the most inventive strategy.
They intend to strike their way out of the economic hole, starting next Wednesday. They will strand 50,000 air passengers at Heathrow and other airports by refusing to make passport checks that, allegedly, they have been bungling anyway.
The lessons of Greece and other ailing Euroland countries have apparently been lost on union leaders but they are not the only ones missing the point. Yesterday another EU summit meeting (was it the 15th or 16th since the debt crisis began?) failed to find agreement on a workable solution.
Just about the only two clubs left in the EU's bag are the proposals to issue eurobonds, guaranteed jointly by Eurozone governments, and for the European Central Bank to fill its boots with national bonds in a strategy similar to the quantitative easing carried out by the Federal Reserve and the Bank of England. On Thursday the German chancellor reiterated her opposition to both schemes.
Because she controls the deepest pockets in the region her opposition effectively amounts to a veto. Following their meeting, the French president and Italy's chief economist were forced to stand beside her on the podium and expound the benefits of a new treaty that would oblige governments to limit the proportion of debt to gross domestic product (GDP).
The proposed treaty is eerily similar to the one signed in Maastricht 19 years ago, which obliged governments to limit the proportion of debt to GDP. The new one, however, will be different, according to the three leaders, because governments will have to follow the rules.
FX spread betting investors had heard it all before and they either yawned or sold euros. Sometimes both.
Having been presented with so many other crisis-busting strategies over the months their expectations have been managed down to abyssal levels, so it was not anticlimax but resignation that marked their mood. They who expect nothing cannot be disappointed.
Sterling initially moved higher against the euro on the news but it was only by about half a cent and the success was short-lived. By early evening pound/euro Spreads were back where they had started and opened in London this morning unchanged on the day.
Elsewhere the pound spread betting market is lower, but only marginally so. No damage was done by the first revision to Britain's third quarter GDP growth, which was unchanged at 0.5%.
Today's statistical reckoning opened with a return to deflation in Japan, where consumer prices fell by -0.2% in the year to October. The rest of the day's agenda includes nothing of importance to the major currencies.
A scrape of the barrel reveals inflation in Iceland, Christmas shopping in America and very little else. It could be an even duller day than Thursday. Have a good weekend.
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'Pound Spreads Down as Q3 GDP Growth Confirmed at 0.5 Percent', Article by Moneycorp, last update: 25-Nov-11
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