The ECB meets today, apparently to discuss the interest rate, but as that is unlikely to change the meeting would be a valid excuse to unveil new anti-crisis measures. Purchases of government bonds are in the limelight currently, and the news of the ECB releasing some new powerful support such as stepping up its purchases of eurozone bonds, caused equity markets up and peripheral debt down. Portugal managed to shift its 500m euro bonds at the auction yesterday, bid-to-cover was 2.5 versus 11.8 last time but apparently the good news was that anyone bought the bonds at all. Especially as S&P warned of a possible Portuguese debt downgrade recently, while they constantly deny the need for outside help.
The EU PMI Manufacturing came yesterday worse than expected, while UK PMI Manufacturing came out strong at 58.0 which was considerably up from the previous month's 54.9. This was a 16 year high for UK PMI Manufacturing, which was down to a surge in exports and companies adding jobs at record levels. This news pushed sterling euro to the high 1.19 mark, but this was short lived.
US stocks rallied yesterday after the ADP national employment change showed its largest jobs gain in three years in November, adding 93,000 jobs was higher than analysts expected and an improvement on last month which could mean the labour market is gathering momentum. ISM Manufacturing also continued to expand last month, and although it was not as good as last month any figure over 50 shows expansion and it hailed in at 56.6. These signs of a modest economic recovery caused and immediate positive dollar push but markets were distracted by the news that the US would be ready to back larger European financial stability by increasing their IMF commitments. The US is the biggest shareholder in the IMF who has already contributed 250bn euros to the EFSF rescue mission. This is clearly down to the concern in the US over the debt crisis in Europe, so much so that a US envoy has been sent to Europe for discussions over the obvious market problems. The Fed have also published details of more than 21,000 transactions with banks that it made throughout 2007-2010, as demanded by critics who have wanted to know if the Fed's support was a bail-out for Wall Street.
In a whirlwind attempt to speed up the oncoming of the weekend everyone is dropping important data today. We open with UK PMI Construction at 9:30 and this is followed by EU GDP and PPI at 10am. As mentioned the ECB Interest Rate Decision is released at lunchtime. The US then launch in with Initial Jobless and Pending Homes sales later this afternoon.
Latest exchange rates at time of writing
1.1872 | 1.1878 |
1.5617 | 1.5618 |
1.3156 | 1.3159 |
131.21 | 131.28 |
1.6138 | 1.6140 |
2.0708 | 2.0719 |
1.5832 | 1.5840 |
0.7537 | 0.7545 |
10.89 | 10.90 |
6.969 | 6.984 |
4.738 | 4.747 |
110.58 | 110.63 |
Rates are dependent on amount transacted.
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