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The Iron Lady

Dec 2 • Market Commentaries • 2470 Views • Comments Off on The Iron Lady

Once all the global financial crisis ‘dust’ has settled and a brighter, harmonious global financial future begins to take shape, history may be kind to the German chancellor Angela Merkel. Steadfast and resolute she appears to be the only senior ministerial decision maker who has kept her head and dignity throughout the Eurozone debacle. Despite intense pressure the overwhelming impression is that her motives are genuine.

Her absolute refusal to climb down from the moral high ground is admirable, there is no trace or arrogance in her position or statements, in short she appears completely dedicated to protecting the original noble aspirations of the Eurozone project and the seventeen nation shared currency. Unlike many of the democratically un-elected technocrats, now shoe horned into positions of authority in Greece and Italy, she has no ‘skin in the game’, she is ‘fighting the corner’ for all Europeans.

As her and her coalition government’s objection to the ECB back stopping the Eurozone debt becomes more of an insoluble issue, the shrill voices in the mainstream media will grow louder and the content and criticism embedded in publications will become more vicious. The outcome for the Eurozone and the overwhelming crisis is still difficult to predict, however, in this era, were the lines between corporate interests, politics and banking are blurred, she remains first amongst equals in refusing to be party to the groundswell of influence to put private interest groups demands ahead of fair and equitable treatment of her fellow citizens..

Merkel told lower-house lawmakers in Berlin today in a speech previewing a Dec. 9 summit of European leaders;

Marathon runners often say that a marathon gets especially tough and strenuous after about 35 kilometres. But they also say you can last the whole course if you’re aware of the magnitude of the task from the start. Leaders have to overcome fundamental flaws in the construction of the euro area. If we do this, we show that we see not only the struggle of the crisis but, above all, that we view the crisis as the turning point toward something good, a chance to turn things around. The lessons are very simple: Rules must be adhered to, adherence must be monitored, non-adherence must have consequences.

Europe needs fiscal oversight that’s “binding” and includes “real automaticity” to punish states that persistently breach debt and deficit rules. As long as governments retain national control over budgets, joint euro-area bonds are unthinkable.You have to differentiate between credible enforcement powers and joint European control over revenue and spending. And as long as this is so, joint liability for the debt of others is unthinkable. That also takes care of the debate over so-called euro bonds for now.”

Stocks rose, poised for the biggest weekly advance in three years, ahead of U.S. jobs data and German Chancellor Angela Merkel’s speech to lawmakers on Europe’s debt crisis. Copper and U.S. equity futures advanced. The MSCI All Country World Index climbed 0.4 percent as of 8:04 a.m. in London, bringing its advance to 8.6 percent over the past five days. The Stoxx Europe 600 Index gained 1.1 percent, copper jumped 1.2 percent and Standard & Poor’s 500 Index futures increased 0.6 percent. The Dollar Index fell for a fifth day. The Shanghai Composite Index lost 1.1 percent, capping a fourth weekly retreat. The Dollar Index, which tracks the U.S. currency against six major trading partners, declined 1.8 percent this week. The greenback weakened versus 15 of its 16 major peers in the past five days.

S&P 500 futures expiring in December rose to 1,252.3. The U.S. equity benchmark has jumped 7.4 percent in the last four sessions. The Institute for Supply Management’s factory index increased to 52.7 last month from 50.8 in October, the Tempe, Arizona-based group said yesterday. Benchmark 10-year Treasury yields rose two basis points to 2.11 percent. The yield reached 2.14 percent yesterday, the highest since Nov. 14.


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Copper in London was poised for a 9 percent gain this week, the first advance since October, on signs that demand is still strong amid falling global inventories. Three-month delivery copper on the London Metal Exchange increased 1.2 percent to $7,880 a metric ton.

More than $3 trillion was added to the value of global stocks this week after central banks took steps to ease Europe’s debt crisis and support economic growth. European Central Bank President Mario Draghi signalled yesterday that the ECB could do more to fight the debt crisis as long as governments push the euro area toward a fiscal union.

Australia’s S&P/ASX 200 jumped 1.4 percent today and the Nikkei 225 Stock Average gained 0.5 percent. Hong Kong’s Hang Seng Index advanced 0.2 percent.

The Shanghai Composite rose 2.3 percent yesterday after China’s central bank cut lenders’ reserve requirements for the first time since 2008. Manufacturing contracted last month for the first time in two years, a purchasing managers’ index showed yesterday. Shanghai home transactions slumped 53 percent last month from a year earlier, Shanghai Securities News reported, citing data from Shanghai Deovolente Realty.

Market snapshot at 10:40 am GMT (UK time)

European bourse indices have enjoyed a significant boost in the morning session. The STOXX 50 is up 1.92%, the UK FTSE is up 1.70%, the CAC is up 1.71%, the DAX is up 1.61%. Brent crude is up $0.54 a barrel and spot gold is up $5.73 an ounce.

Economic calendar data releases that may affect the sentiment of the afternoon session

13:30 US – Change in Non-farm Payrolls November
13:30 US – Unemployment Rate November
13:30 US – Average Hourly Earnings November
13:30 US – Average Weekly Hours November

Employment stats dominate the fundamental economic news releases this afternoon. The prediction for NFP numbers is vital to underpin the claims of an improved domestic economic landscape in the USA . A Bloomberg survey of analysts yielded a median estimate of 125,000 added to payrolls compared to a previous figure of 80,000. The median figure from a Bloomberg survey of analysts for unemployment was a rate of 9.00%, unchanged from the previous figure.

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