EU Morning Report – G20 Agrees to disagree on fiscal consolidation!
Here are the latest Financial News:
G20 Agrees to disagree on fiscal consolidation!
- Markets traded cautiously on Friday and the USD softer on Friday as Q1 GDP was revised to 2.7% from earlier 3.0% estimates. Markets on Friday were sidelined as trader’s squared positions ahead of the weekend G20 meeting. The agenda at the G20 was fiscal consolidation however fear arose as countries varied in their opinion on the matter. Countries such as the US for e.g. favored growth policies and want to avoid fiscal cuts as it would put the fragile recovery in to jeopardy. On the other side of the Atlantic however we had countries such as Germany promoting fiscal consolidation saying that it will bring confidence to the markets and restore trust between counter parties. As the G20 came to an end however we had brilliant communiqué from the G20 as all countries agreed to disagree. All members agreed that growth is their main policy however the agreed different countries must consider their individual circumstances and must be flexible in deciding when to cut their deficits. The markets seemed to have taken a liking to the communiqué and risk appetite has picked up since. USDJPY price action was between 89.76 – 89.21.
- In the Europe we had ECB executive board member Tumpel-Gugerell say that Europe’s economic recovery is on track and that fiscal consolidation may have positive longer term affects as it will increase confidence in the markets. He also noted that if the EU bank stress tests show that banks require more capital than it can be raised either via private or public sector funds. In Greece we had agreement over a pension reform plan which will be a significant reduction to Greece is deficit reduction plans. EURUSD price action was between 1.2467 – 1.2207.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.2320 with a preference to enter into Long positions at 1.2330
- § The USDJPY pivot point is at 89.20 with a preference to enter Long positions at 89.25
Today’s calendar and market movers:
- § Germany Consumer Price Index m/m June expected at 0.1%
- § United States Core PCE for May m/m expected at 0.1%
Equity Markets:
- US equities closed mixed yesterday with the S&P500 down by 0.29% and the DJIA down by -0.09%. The European bourses were negative yesterday with the FTSE down -1.05% the DAX and the CAC closing at -0.73% and -1.00% respectively. The NIKKEI and the HSI at the time of writing is -0.45% and 0.35% respectively.
Source: Easy Forex
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