- EU leaders still far from a budget deal.
- Shinzo Abe indicates that Japanese central bank law may not need to be changed.
- Anger in Argentina after US ruling that it must pay holdouts from its 2001 default.
It has been a calm session with U.S. markets closed for Thanksgiving and Japanese markets closed today. EU negotiations on the budget for 2013-2020 were paused shortly after midnight without getting much closer to a deal. In the latest compromise proposal some of the spending cuts in the Common Agricultural Policy and regional aid demanded by the UK and Germany had been put partly back in place as wished by Poland and France. With positions still far apart it is increasingly likely that the EU leaders will not be able to strike a deal at this summit even if it is extended into the weekend.
The EU leaders appointed Yves Mersch to the ECB board despite the European Parliament’s rejection based on gender considerations. Mersch has a reputation of being an inflation hawk.
In Japan Liberal Democratic Party president Shinzo Abe, who is likely to become president after the elections on 16 December, said that if the central bank agrees with a 2% inflation target there is no need to change the central bank law and that central bank independence is important. He also indicated that fiscal policies will be applied together with monetary policy in order to bring an end to deflation.
Argentinean shares fell to a five-month low and bond yields rose after a U.S. ruling that Argentina must pay USD 1.3bn to holdouts from its 2001 default and investor concerns that this could cause Argentina to default yet again.
U.S. equity markets were closed yesterday because of Thanksgiving but U.S. futures point to small gains when markets open. Canadian shares rose for a fifth day. In the Asian session the positive sentiment continued with the Hang Seng up 0.3%. Asian shares are heading for their strongest week in two months.
In FX markets EUR/USD has traded fairly flat overnight and is currently trading around 1.289. The Japanese yen strengthened against most other currencies on speculations that recent declines may have been a bit overdone. Brazil’s real dropped to the weakest level since May 2009 as the finance minister said the currency is on a ‘normal trajectory’ and speculators assume that the central bank will keep the currency weak.
Oil prices are declining as the ceasefire between Israel and Hamas has eased concerns of regional tensions that could disrupt crude supplies.
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