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FX Day Trading - 15 September 2011
Anniversary
Today is the 3rd anniversary of Lehman's collapse
A soothing statement from German and French leaders yesterday
The world continues to demand more political correctness. I am being told that children that display ongoing patterns of disobedient, unreceptive and defiant behaviour are now being termed as “oppositionally defiant” or having Oppositional Defiant Disorder (ODD). They are no longer referred to as spoiled brats.
Yesterday China, who is increasingly acting like a parent on the world stage, sent a clear message to the “oppositionally defiant” members of the European Union by stating that China should not be viewed as the lender of last resort. That implies that the likes of Italy and Greece should not bank on help from the Chinese to sort out their mess.
Chinese Premier Wen Jiabao, said that “Countries must first put their own houses in order”, he added, “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.”
For the umpteenth time in the crisis Greece has received another reprieve and another vote of confidence from the core of Europe. On the 3rd anniversary of Lehman's collapse and with spread betting markets having been as fragile as they were in the days leading up to this event, Ms Merkel and Mr Sarkozy had little choice but to say that they “are convinced that the future of Greece is in the eurozone”.
European governments are aiming to ratify a July 21 agreement to bolster the euro region’s bailout fund and extend a second rescue to Greece. Financial spread betting investor skittishness over the spread of the debt crisis has raised banks’ funding costs and roiled markets worldwide.
What is clear is that European sovereign concerns will not be quickly reversed. The amount of Sovereign debt compared to a country’s Gross Domestic product, otherwise known as debt-to-GDP ratios, are stabilised through a combination of:
and/or lower funding costs (including restructurings and defaults)
Peripheral countries in the EU (Greece/Portugal) have increasingly been confronted with falling growth expectations, rising social tensions over austerity measures and increasing funding costs.
One can therefore see why the markets attach such a big possibility to Greece defaulting on its debts. Faster growth, higher surpluses and lower funding cost remain unlikely in the current political and economic environment.
Yesterday retail sales in the U.S. stalled as a lack of new jobs restrained shoppers, further highlighting the risk that the economy could grind to a halt. Household spending accounts for about 70 percent of the US economy and the outlook remains bleak.
Today the data flow is of little interest in the euro area. UK August Retail Sales are seen flat. In the US, CPI is seen supported by energy costs, and Industrial Production seen steady. The first crop of September sentiment figures are expected to come in slightly higher.
Currency Trading and Spread Betting carry a high level of risk to your capital and you can lose more than your initial investment, they may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
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.
'Spread Betting: EU Leaders Pledge Support to Greece', Article by Moneycorp, last update: 15-Sep-11
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