EURO:
It was another rather dismal day for the Euro yesterday which resulted with it been sold off right across the board. It started with ratings agency S+ P putting Italy on a negative credit watch on Friday and then we saw Belgium put on a negative outlook by Fitch yesterday. The market is also keeping a close look on developments in Spain after a weekend of protests against austerity cuts and electoral losses for the ruling Socialist Party. The situation was further compounded as EU economics commissioner Olli Rehn saying that “a voluntary extension of loan maturities, so called reprofiling or rescheduling on a voluntary basis could also be examined on the con¬dition that it would not create a credit event.” However rating agencies have stated that a voluntary restructuring would count as a default and as such would be seen as a “credit event “ . It appears at the moment that what¬ever to try and do to sort out the situation that somebody somewhere has a counter argument.
DATA : 9.00am German Ifo Business Climate
DOLLAR:
The best performing currencies of 2011 are falling out of favour as the Federal Reserve plans its exit from re¬cord monetary stimulus just as the global economy shows signs of slowing. A basket of nine currencies which includes the Aussie and Norwegian Krone have dropped 4.2% in May against the dollar compared to a 7.3% increase we saw during the first 4 months of 2011. Many major financial institution have forecast that the global economy will slow down during 2011. Barclays have predicted that we will see an expansion of 4.1% during 2011 down from 4.9% in 2010. The major beneficiary of this flight to safety has been the dollar which has re¬sulted in a rise for the Greenback against all 16 of its most traded counterparts in May after falling against each one except the Yen during the first four months of 2011.
DATA : 3.00 pm New Home Sales 305k
General:
The Aussie snapped 2 days of losses after the head of the governments debt office said that the dol¬lar was gaining stature as a global reserve currency. The Kiwi also gained after a central bank report showed company executives raised their expectations for inflation.
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