Fitch has shocked the market by announcing that the ECB must step in to prevent a collapse of the euro. As a result, EUR/AUD created a new all-time low but managed to hold above 1.2300, yet for how long? Fears over the European crisis are unlikely to dissipate anytime soon and if the positive flow of data out of the US continues it should benefit the aussie.
Themes:
• Chinese inflation figures are being due to be released at 12:30 AEST. Any indication that the domestic economy is slowing faster than anticipated could prove to be very detrimental for risk assets. Consensus estimates are pointing towards a headline CPI figure of +4.0%y/y and a PPI figure of +1.7%y/y.
• David Riley, head of sovereign ratings for Fitch said that the ECB must step in to prevent a collapse of the euro, this caused a sharp sell-off in the euro but the pair has managed to claw its way back above 1.2700.
• There was a report from Reuters stating that the new EU fiscal treaty will include an escape clause from a balanced budget rule in case of an economic downturn or unusual event. Are cracks already appearing in the plan before it is even implemented?
• The meeting between Merkel and Monti went mostly as expected, except for hints that Merkel might be softening on her stance of not injecting the ESM long-term rescue fund with more cash. Also, Monti promised to focus on structural reforms going forward.
• In Japan, current account figures came in well below expectations of 248.4 billion yen at 138.5 billion yen. The data highlights the impact that weak global demand is having on Japanese exports.
Themes:
• Chinese inflation figures are being due to be released at 12:30 AEST. Any indication that the domestic economy is slowing faster than anticipated could prove to be very detrimental for risk assets. Consensus estimates are pointing towards a headline CPI figure of +4.0%y/y and a PPI figure of +1.7%y/y.
• David Riley, head of sovereign ratings for Fitch said that the ECB must step in to prevent a collapse of the euro, this caused a sharp sell-off in the euro but the pair has managed to claw its way back above 1.2700.
• There was a report from Reuters stating that the new EU fiscal treaty will include an escape clause from a balanced budget rule in case of an economic downturn or unusual event. Are cracks already appearing in the plan before it is even implemented?
• The meeting between Merkel and Monti went mostly as expected, except for hints that Merkel might be softening on her stance of not injecting the ESM long-term rescue fund with more cash. Also, Monti promised to focus on structural reforms going forward.
• In Japan, current account figures came in well below expectations of 248.4 billion yen at 138.5 billion yen. The data highlights the impact that weak global demand is having on Japanese exports.