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Greeks protest against the austerity, the French plan is being discussed in Europe

by admin | June 28, 2011 | Currency | Leave a comment

On the first day of the general strike in Greece which was called by the main unions of the country to protest against the economic austerity program that the parliament should vote on Wednesday and Thursday, the country is idling. In the Euro zone, the reactions are connected after the plan was announced Monday defended by Nicolas Sarkozy to support Greece’s debt through the use of private banks.

Power outages, canceled flights, transports blocked … The Greeks began a strike on Tuesday 48 in protest against the austerity plan to be voted on Wednesday and Thursday in Parliament. At the call of the main unions of the country, GSEE, which represents some 2 million private sector employees and ADEDY, union officials, opponents of large tax increases and budget cuts foreseen in the austerity plan together general strike for the fourth year in the country.

Demonstrations began at midday, mainly in Athens Syntagma Square, opposite the parliament, where the camp since the end of May “outraged”. These include the abandonment of demanding repayment of debt and the end of austerity policies.

The plan, intended to reassure members of the euro area and the International Monetary Fund by restoring the country’s debt, is a prerequisite to payment of a new financial aid to Greece. Monday, Prime Minister George Papandreou appealed to “patriotic duty” of MPs asking them to vote for this program spanning three severe economic years of 2012 to 2015.

In Germany, caution is in order. ‘We are studying the French plan with great interest “has said the Association of German public banks in a statement. The owner of the first commercial bank of the Rhine, Deutsche Bank issued a warning against any forward in the decision-making. “political leaders expect a solution by the end of the week, but we should not rush,” said Josef Ackermann has told Reuters.

In Italy, the CEO of the bank Intesa Sanpaolo, Corrado Passera said there is “room for a strong collaboration between European institutions, banks and the Greek government but there is obviously some work to do before can lead to a final solution. “He was speaking after the Institute of International Finance, a body bringing together representatives of 400 banks around the world gathered in Rome to discuss the crisis in Greece.

Greece finally, the press tends to favor the idea supported by France. The French president and figure in a business daily Naftemporiki. “The French have a solution for the debt,” announces a headline in Nea Te, pro-government national daily.

Moment of truth for the U.S. bond markets

by admin | June 28, 2011 | Investment | Leave a comment

The return on Treasury bills to 10 years, currently at 3.01%, is below the rate of CPI inflation of 3.6% in May Real yields have therefore become negative. An investor in U.S. bonds do not even see the annual interest it receives offset inflation. And since May, import prices increased by 12.5% and prices of industrial production by 7.3% over the previous year, consumer prices are likely to reach, in the coming months, the area of 4 to 4.5%. The negative real interest rates will be even more important. The private and institutional investors will not continue longer their purchases of Treasury bills.

In addition, the household savings rate remains very low at 4.9% of disposable income. Having lost confidence in the future, households reduce their debt since the beginning of the year. But then who is going to purchase the new issue of treasury bills? Insurance companies and pension funds must have a return that at least offsets inflation and cover their expenses or they can no longer guarantee adequate pensions to their clients or affiliates.

In the U.S., the Fed with a portfolio of 1 300 billion in Treasury bonds, 14% of total public debt, is the largest creditor of the state. China has 1100 billion or 12% of the debt. With the end of the second tranche of quantitative easing (QE2), scheduled for late June, the Fed wants to end the purchase of treasury bills.

As for China, it continues to repeat its intention to diversify more broadly its large reserves of money, in fact, the People’s Republic has bought more Treasury bills since last fall. The OPEC countries also suspend their purchases. One solution would be to cut American in public spending and reduce the new debt of 1500 billion or raise taxes: the Democrats are against the first solution … the Republicans do not want the second. All operators seem to be limited to a “ostrich policy”, hoping for a miracle or a decisive action by the Fed. However, if nothing happens, rates may soon increase by two percentage points.

The dollar is scared whilst the euro benefits

by admin | June 16, 2011 | Trading Forex | Leave a comment

It’s not the euro, which is resisting the dollar, that is starting to burn the fingers of investors. At other times, like last year at this time, the euro would have cashed the full force of the plight of distressed countries in the euro area and the constant drama of the debt crisis of Greece to its worth sovereign rating of the damage cascade. The single currency of Seventeen yet manages to hold a candle to the greenback and is at its highest level in a month – to 1.4630 dollars on Friday – so close to its peak in early May this year reached to 1.4830 dollar.

It is surprising that resilience in an environment as unfavorable. It is in fact the shadows that accumulates on the dollar, which had been its recovery in May that the episode of the postponement of the second rate hike of the European Central Bank, as markets waited June, which should not occur before July. As the dollar weakens not only against the euro but also against all major currencies. Thus, the safe haven par excellence the Swiss franc was left powered to a new high of force against the dollar, moving up to 0.8383, but also to the euro, a , 2055. All of which leads to the strategists of Royal Bank of Canada, without the Greek crisis, the pair euro-dollar was trading at … 1.66, well above the peak reached any time by the single currency July 15, 2008, at 1.6038.

Euro continues to gather momentum before Bernanke speaks

by admin | June 10, 2011 | Currency | Leave a comment

The upturn in the euro continued while the greenback was hit by a series of statistics showing a slowdown in the U.S.. Around 24:30, the single European currency also gained 0.63% to 1.4670 dollar.

This level contrasts with the $ 1.40 mark, which was briefly down here about 15 days. Since the beginning of the year, the euro appreciated by nearly 10% against the dollar.

Indeed, several statistics have punctuated the news in Europe (Chicago Options: ^ REURTRUSD – news) on a overall positive tone. The volume of retail sales increased 0.9% in the euro area in April 2011 compared to March 2011, where expectations were only 0.3%.

Similarly, German industrial orders in April rose 2.8% against an expectation of only 2%. Moreover, the decrease of 4% first announced in March was reduced to 2.7%.

Also in Europe, finally, news of the Greek front – the granting of new credits – to encourage more optimism with respect to sovereign risks. ? According to Christian Noyer, governor of the Banque de France, Europe is undergoing the crisis, but the pace of recovery could slow in coming quarters. The Greek situation seems about to normalize it with new aid promised?, Reported this morning the traders of Pictet & Cie.

Conversely, the gloomy side dominates the dollar after the sharp disappointment Friday with the employment report for May. The scenario of a slowdown in U.S. economic growth is confirmed. Early indicators for April / May can even talk of a slowdown violent?, Comment Aurel BGC analysts this morning.

? Clearly, if investors anticipate a rapid deterioration of the situation, they will also anticipate a ‘EQ3′. The violent reaction to the dollar mixed indicators of activity against the euro boosted by the announcement of a possibility of additional aid to Greece, confirmed the sensitivity of investors to this topic?, They add.

Still less, as Aurel BGC, here it is more of a slowdown in the growth of a relapse. The U.S. central bank, whose members appear divided over the recent past, in this context would have difficulty justifying a major action.