EUR/GBP Forecast December 26, 2011, Technical Analysis

EUR/GBP saw a nice rally during the Friday session as the markets traded in light volume. The pair is more than likely being influenced by the withdraw of British banks from the European Union. The pair has recently broken down through the 0.85 level showing a massive breach of support as well, and this sets up a bearish case for this pair going forward.

However, the bounce on Friday should be respected, and the candle was impressive. The 0.84 level has a cluster that could offer resistance at this point, and we would be willing to sell on signs of weakness there. Noting this, we also have to look at the 0.85 level as a potential selling area as well since it was so supportive previously. Classic technical analysis suggests that we should see some kind of “retest” of the area, and we are more than willing to sell a bearish candle at that point as well.

The British economy will be hurt by the recession that is almost undoubtedly coming to Europe as the UK exports 30% of its goods to that region. Because of that, we think this pair will continue to fall, but it might not be overly steep in its trajectory. The move down could be a slow and steady grind, which describes the moves in this pair 90% of the time anyway.

The breaking back above the 0.85 level would have us rethinking this market, but until that happens we cannot suggest buying this pair at all – even if we see the bounce coming. A breaking of the lows on Wednesday could have us selling as well, but the area is the start of a decent cluster of orders from months back. This keeps us hoping for a slight bounce from which to sell, which of course is not only following the overall recent trend, but it also has the ability to give us more momentum to fall from higher levels. The pair will continue to be one to watch going forward as we fully expect the downward momentum to continue, but perhaps after a small but welcome bounce.

EUR/GBP Forecast December 26, 2011, Technical Analysis
EUR/GBP Forecast December 26, 2011, Technical Analysis

EUR/GBP Forecast for the Week of December 26, 2011, Technical Analysis

EUR/GBP fell during the week and looks very vulnerable in general. This is probably being exaggerated by the flow of capital out of the European Union and back to the United Kingdom as British banks struggle to repatriate their capital out of the damaged EU. The pair did get a bounce on Friday though, and as a result we ended up with a hammer for the weekly candle. The breakdown has been considerable for some time, so we don’t necessarily look at this as a buy signal, rather a sign that the pair should bounce from here. When and if it does, we will be waiting at the 0.85 level to see if former support now offers resistance as dictated by classic technical analysis. We don’t recommend owning the Euro at the moment as the area it represents is the central of the storm for global fears presently.

EUR/GBP Forecast for the Week of December 26, 2011, Technical Analysis
EUR/GBP Forecast for the Week of December 26, 2011, Technical Analysis

EUR/GBP Forecast December 23, 2011, Technical Analysis

EUR/GBP rose slightly on the Thursday session, but was at one point much higher than the close. The pair formed a shooting star at the bottom of the most recent fall, and this suggests that there is going to be more weakness going forward. The Euro is toxic at the moment, and there is a real chance that money is flowing out of Europe and back to the United Kingdom as banks get rid of their risk on the continent. The pair looks like a sell on the rally pair, and we shall continue to do so. A break below the session low from Thursday also has us selling again.

EUR/GBP Forecast December 23, 2011, Technical Analysis
EUR/GBP Forecast December 23, 2011, Technical Analysis

Gloomy Figures in the UK and Revised Figures in the USA

Currently there are an estimated 2.64 million unemployed people in the UK, with a total of 9.33 million domant people in the country. As unemployment climbs 128,000 to a rate of 8.3 per cent – the highest level since the 1980’s. Many seem surprised except if one had honestly looked at the austerity measures implemented in the UK, the jobs cut by government and military alone would have predicted this rise added to the business failures and the employment cutbacks an astute economist should have be able to project these figures pretty close to dead on.

Data released today put the unemployment rate at its highest since 1996.

Growth is stalling and there are chances of another recession in the first half of 2012, as inflation sits right around 5 per cent.

Cutbacks to the welfare system will also add to the problems of Britain’s unemployed.

Market analysts are stating that while today’s overall unemployment figures are “better than expected” it “doesn’t change the picture at all”.Prospects aren’t looking good for next year either because of low growth.

Today’s  ONS figures have shown, moderate gains in the private sector but they have not offset losses in the public sector, primarily in public administration and education.

There is still a demand for specialist roles in finance and IT and these sectors will remain liquid over the coming months.

While across the pond in the USA the economy expanded less than thought during the third quarter as consumer spending fell short of an earlier estimate, though signs point to stronger growth in the final months of the year. And this is left open to interpretation and to revision.

New claims for unemployment benefits unexpectedly fell last week, reaching the lowest level since April 2008 and providing another sign of improvement for the weak labor market. But are expected to come in higher this week, or hold steady until after the holiday season

GDP, the widest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.8% in the 3rd quarter period. While still the strongest performance of the year, the Commerce Department’s third estimate of GDP is lower than the previous reading of 2.0%.

The economy’s lower growth level was largely due to a downward revision of how much consumers spent. The latest estimate showed personal consumption expenditure, which accounts for about two-thirds of spending in the economy, rose by 1.7% in the third quarter. That compares to a previous estimate of a 2.3% increase.

All in all the US is chugging along slowly but surely on the way to a slow recovery. Whereas the UK and the EU show signs of entering a recession in the 1st quarter of 2012. It looks gloomy back across the Atlantic. Hopefully, America will be able to fence themselves off from the problems facing the EU.

EUR/GBP Forecast December 22, 2011, Technical Analysis

EUR/GBP fell on Wednesday as the Euro continues to struggle overall. The banks in Europe took far more advantage of the ECB’s lowered offer on funding, and this shows just how much damage has been down in the EU so far. The Euro will suffer as British banks pull their money out of the continent, and the flow of money continues north across the English Channel. The breaking of 0.85 a couple of weeks ago was a significant event, and as a result we are only selling this pair currently. Rallies are to be sold, and new lows could be as well.

EUR/GBP Forecast December 22, 2011, Technical Analysis
EUR/GBP Forecast December 22, 2011, Technical Analysis

Pessimism Returned to Market and USD Trimmed Some Losses

By the start of the European session, currencies benefited from the optimism which extended from yesterday’s trading, yet optimism didn’t last as the European Central Bank offered more than expected loans for the euro-area banks.

Knowing that the BoE released its meeting minutes today, where the vote to keep the rates at 0.50% and the Asset Purchase Facility at 275 billion pounds was unanimous, as policy makers await the impact of the program that will end in February.

Noting that Asian stocks managed to end today’s session in green, while the European and American stocks couldn’t, as they dropped despite the data that was released by the US housing sector, where existing home sales incline in November above expectations, knowing that investors felt pessimistic after the ECB’s announcement.

In Europe DAX declined nearly 0.5% while CAC 40 dropped by 0.6%, on the other hand, the euro slumped against the US dollar trading around the 1.3039 level compared with the highest level today of 1.3198, dragging the pound to the opening levels trading around 1.5658 level.

The yen is trading around the 77.96 level. The AUD dropped trading around the 1.0063 level. The CHF is stronger today as demand on safe haven widened, trading around 0.9376 level, on the other hand, the USD trimmed some of yesterday’s losses trading around the 80.07 level.

As markets returned to the pessimistic view over the euro zone debt crisis and the USD experienced gains, commodities dropped, where gold is trading around the $1608.79 level from the opening at $1615.34, while oil is trading around the $98.20 per barrel level after the EIA report showed a deep decline in crude oil inventories.

Markets and Investors Shrug Off ECB LTRO

The euro began climbing  this morning after strong demand in response to the European Central Bank’s first ever three-year refinancing operation, but slacked shortly after.

The ECB attempted to send a loud signal to  markets by offering to loan $641 billion to 523 euro-area banks in a massive three-year funding operation. If anything the ECB assured that European markets and currencies should be under control over the holiday season.

The funding move by the eurozone central bank, known as a longer-term refinancing operation, or LTRO, is open to lenders across the euro zone. The figure came in excess of market expectations of $408 billion. The loans run for three years.

A spokesperson with the European Central Bank‘s press office said that the central bank would not be releasing the names of the banks that applied for loans. Nor would it provide a breakdown of loans by euro-zone nation.

The LTRO operation was the first three-year funding operation undertaken by the central bank. The funds are borrowed at its average interest rate, which stands at 1%.

Having been already higher, the euro jumped to a session high of $1.3197 against the dollar immediately after the ECB’s announcement, before dropped back. In New York, the single currency was down 0.4 per cent on the day at $1.3026. Against sterling, the single currency was down 0.5 per cent at £0.8310.

European indexes added as much as 1.3% in the moments after the results of the ECB funding operation was released, but those gains all but disappeared.

Among the beneficiaries, Lloyds Banking Group PLC climbed 3.9% and RBS PLC gained 3.3% in London.

The FTSE 100 index rose 0.1% to 5,427.12, raised by bank stocks, but weighed by a 1.3% loss for BP PLC. The Stoxx Europe 600 index increased 0.1% to 238.90, following a 2% rise in the prior session, which was the biggest overall gain since Nov. 30.

French banks, BNP Paribas SA moved up2.7%, Credit Agricole climbed 1.6. The French CAC 40 index rose 0.3% to 3,063.13.

The German DAX 30 index moved up 0.3% to 5,866.28, prompted by a 3% rise for Commerzbank and a 2.7% rise for Deutsche Bank, Insurer Allianz rose 2.7%.

Sterling’s move higher was little influenced by minutes from the Bank of England’s December meeting.

The vote to leave policy on hold earlier this month was unanimous, but some members of the monetary policy committee noted that the fragile economic conditions, particularly in the labor market suggested “a further expansion of the asset purchase program might be warranted in due course”.

There was, however, equal uncertainty about inflation. The bank has consistently predicted a sharp fall in inflation in 2012, but there have been few signs so far that this will materialize.

Analysts played down hopes that the funds would help prop up euro-zone sovereign bond markets, despite the heavy demand, which was at the high end of the market’s expectations. All in all the markets ignored this move by the ECB, as the only beneficiaries seemed to have been the banks, but there still isn’t an overall plan to guide the eurozone out of the financial and debt crisis it is facing. Just a lot of banks bloated with money.

EUR/GBP Forecast December 21, 2011, Technical Analysis

EUR/GBP fell below the recent consolidation area as the Euro fell against many currencies around the board. The EUR/GBP made a significant move when it broke down below the 0.85 handle a few days ago, and we believe this is the start of a leg down. The 0.80 level is more than likely the next stop for this pair, and as a result we are willing to sell at this point. Rallies would also have us selling as well. The 0.85 level would have to be broken to the upside for us to consider a change in our approach to this pair currently.

EUR/GBP Forecast December 21, 2011, Technical Analysis
EUR/GBP Forecast December 21, 2011, Technical Analysis

Are the Ministers of the EU Countries Con Men and Scammers

I normally do not write commentary or opinions or even in the first person, but today, I was reading the Wall Street Journal and came across a story on how euro nations are going to try to prop up their banks.

I was totally amazed at what is being suggested. It is like a terrible con game, a fraud. Politicians and Government Officials along with Bankers have concocted a huge network of deceit and fabrication to circumvent the legal requirement of the International Monetary Fund. Does this mean that individuals and businesses can bend the rules, break the laws and use fraud and deceit in times of crisis?

There are a lot of convicted felons we should be releasing from prison if this is the case.

This chart looks like a giant scam or it is a Ponzi scheme or one of those other schemes that con men and scammers give great names to.

This is not a way to solve debt crisis or financial crisis, it is simply a way to move it from column A to column B. Ah, and maybe that is it, Chinese checkers.

The Italian government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans. Perhaps they should ask the mafia for assistance.

Maybe the EU should contact the drug cartels of South American and ask for a loan.

It is not only the Italians, it so the cash strapped governments throughout the EU.

Governments in Germany and Spain also are using unorthodox measures to support their ailing banks.

“Most of these backdoor-type schemes seem to be limited in size and don’t address the broader problem,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland.

If the EU cannot resolve their own problems or at least develop a plan to do so, why should the other nations of the world allow this type of behavior? In this case, I am in full support if the US uses their veto and pressures the IMF to avoid these type situations. The ECM, the IMF and the Finance Ministers of the World need to exert pressure on the leaders of the EU to come up with a definitive plan of action.

Each day we hear promises that fail to materialize. The Sarkozy-Merkel fiscal pact is in trouble. The Emergency Fund is unable to raise the funds that are needed. The promises of the EU Council, The EU Parliament and the EU Leaders seem to go up in smoke.

It seems that it is alright to bend the rules during times of crisis. The reason, governments, banks, funds, agencies develop rules and policies are to prevent them from acting improperly during times of need or crisis.

Commerzbank AG is negotiating with the finance ministry to transfer its troubled real-estate finance unit into a government “bad” bank. The bank and government are in talks about ways to structure the deal so it isn’t “considered” a bailout, possibly by protecting the government against some losses or paying the government a nominal fee, according to people familiar with the matter. I ask you is this correct, finding technical ways to hide the truth.

The Portuguese government is devising a complicated financial maneuver that could give the country’s banks The government just closed a plan to transfer banks’ future pension responsibilities to the state balance sheet in exchange for €6 billion in assets, which include cash, stocks and bonds. Most of the money will help the government meet deficit targets.

But about €2 billion may be shifted to struggling government-owned companies, such as transport providers. Under the plan, these companies would use the funds to pay off debts to Portugal’s banks.

“The move will allow debt repayments to public entities, contributing to a cut in loan-to-deposit ratios of Portuguese banks and helping the financing of the economy,” Finance Minister Vitor Gaspar told parliament recently.

Instead of raising more money through a Spanish government bailout fund, a central-bank spokesman said that tapping the deposit-insurance plan would leave the country’s budget goals this year intact. The deposit-guarantee fund will be refilled early next year, and the government will provide a back-stop in the meantime.

This just sounds like shift debt from place to place and hiding it away. We use to call it borrowing from Peter to pay Paul. I always thought it was illegal, it is most definitely unethical and it sure doesn’t solve any problems.

News From the ECB Moves Markets

If ever you wanted to see how important fundamental analysis is to understanding the forex markets and building a trading strategy yesterdays comments by European Central Bank President Mario Draghi dismissed the idea that the euro currency could break up, as he stated it was “irreversible “even as the ECB issued a report about the rising contagion risks posed by the sovereign debt crisis.

The markets and investors are edgy and every comment, press release, statement and rumor is affecting the markets.

Let’s follow the comments yesterday, as Mario Draghi made various different statements, speeches and comments during the day

Draghi, appearing before the European Parliament, said that the next year will be a painful one for European banks and the overall economy. But he said it was simply “morbid speculation” to talk about the demise of the euro.

“I have no doubt whatsoever about the strength of the euro, about its permanence, about its irreversibility,” he said. “The one currency is irreversible.”

The euro rose up 0.2% versus the dollar in trading Monday following the remarks.

In a later interview with the Financial Times, Draghi cautioned that euro-zone nations that depart the euro-area bloc would face severe economic difficulties, including high inflation. He also said that such nations would still need to pursue structural reforms.

This statement surprised the market as it seems to contradict his earlier statement in regards to the irreversibility of the euro stating it was “morbid speculation”

Investors are now asking which countries might leave the euro.

Another statement yesterday that surprised the markets was Draghi’s comments and rebuff of the possible downgrade of France’s debt.  “France losing its Triple-A debt rating shouldn’t be a “terrible thing” but that if France were downgraded, other nations likely would be as well.”I don’t know if France will lose its Triple-A. I hope not,” he said in response to a question of whether the nation will be downgraded. He further stated: ratings from the credit agencies are just one factor the ECB uses to assess collateral. Draghi, who again poured cold water on the idea of stepping up the pace of bond purchases, also said the U.S. needs to take structural reforms and said the U.S. labor market may be “too flexible.”

Markets dropped Draghi downplayed expectations that the ECB would be more aggressive in aiding struggling countries by widening its bond purchases, Draghi has reminded us over and over that the banks governing treaty “forbids monetary financing.”

The comments “put more nails in the proverbial coffin of having the European Central Bank step in as the lender of last resort,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

“That’s disappointing to investors who view ECB purchases of debt issued by European countries nearly squeezed out of the bond market as an important tool in ending the sovereign-debt crisis.”

“That’s one solution seemingly removed,” noted Luschini.

Losses increased after a statement from European Union ministers, said euro-currency members had agreed on providing additional bailout funding via the International Monetary Fund, but fell short of the total funding the markets are expecting.


 

EUR/GBP Forecast December 20, 2011, Technical Analysis

EUR/GBP fell on Monday as the Euro continues to concern traders as a whole. The market looks very weak, and the recent breakdown below the 0.85 level sends a very bearish tone in this market. The breaking lower of this pair would send it to the 0.80 level, and rallies are simply going to be invitations to sell from higher levels. With all of this in mind, we are selling on a break lower or after rallies as long as we stay under the aforementioned 0.85 level.

EUR/GBP Forecast December 20, 2011, Technical Analysis
EUR/GBP Forecast December 20, 2011, Technical Analysis

EUR/GBP Forecast December 19, 2011, Technical Analysis

EUR/GBP had a third consecutive quiet session on Friday as traders took a break from the onslaught that happened earlier in the week. The session shows that the market is focused in the 0.84 level as the market hasn’t been able to move. The break below the 0.85 level was massively supportive, and a break below that signals more weakness going ahead. The pair is a “sell only” pair now, and we are selling rallies at this point, or a break below 0.8360 or so. We will not buy this pair.

EUR/GBP Forecast December 19, 2011, Technical Analysis
EUR/GBP Forecast December 19, 2011, Technical Analysis

EUR/GBP Forecast for the Week of December 19, 2011

EUR/GBP had a very bearish week as the 0.85 support level finally gave way in this market. The pair has been trying to break below that level for quite some time, and as the crisis in the European Union continues to plague the Euro, the Pound is finally finding support in general at the moment. The Euro is simply too toxic to own, so this pair falling makes sense. The 0.80 level will be the next support area to fight this down move, and as a result we are selling rallies until we get below that point. A close on the daily chart above the 0.85 level would change our minds.

EUR/GBP Forecast for the Week of December 19, 2011
EUR/GBP Forecast for the Week of December 19, 2011

IMF Reveals Gloomy Future of Economy and Europe

Chief of International Monetary Fund, Christine Lagarde, said that the IMF sees a gloomy future for Europe and does not think that the available funding of the IMF will be enough to support governments in the EU without reaching of beyond the EU to raise funds.

This past week, there has been evidence of disagreement and legal problems with funds being funneled through the IMF to help specific governments or strictly for the use of EU countries. The IMF is one of the only International Funding Agencies that can offer help directly to governments. Unlike the ECB which can only offer assistance to financial institutions.  The IMF was set up to assist all governments and countries around the globe so all money goes into a general fund, where the IMF determines how it can best be used. The USA has veto power over the use of these funds. It is impossible under the present system for EU countries to contribute funds that will be earmarked only for EU member states.

Once the funds are in the IMF general account, the IMF can then use these funds to help any nation needing funds.

Nations around the globe contribute to this fund but these funds are to be distributed in the forms of loans, and many nations that are willing to contribute more to help the ailing global economy, want to know what assurances the failing EU countries are providing the IMF to make sure of repayment.

There are many problems surfacing within the eurozone that need to be addressed before there is a plan.

Each day, there seems to be more cracks emerging in the financial fiscal pact that came out of last week’s EU Summit. Many economists believe that the EU leadership is crumbling under pressure and unable to deal with the short term crisis.

New pressures keep piling up, while cracks begin to surface. Moody’s has downgraded banks, Fitch has followed suit and Standard and Poor’s continues to downgrade sovereign debt.  While the deadline continues to draw closer each day, what is going to happen in just a few short weeks when the banks of Europe need to raise additional capital and the nations of the eurozone need to refinance maturing debt. To compound the pressures on President Sarkozy, France’s official statistics agency, INSEE, said that it expects the Europe’s second-largest economy to fall into recession in the final three months of this year and the first quarter of 2012.

In her address in Washington Lagarde stated “It is going to require efforts, it is going to require adjustment, and clearly it is going to have to start from the core of the crisis at the moment, which is obviously the European countries and in particular the countries of the eurozone.”

Lagarde continue to warn the nations of the world that no economy would be immune to the economic havoc coming from the eurozone, urging nations around the globe to offer assistance.

EUR/GBP Forecast December 16, 2011, Technical Analysis

EUR/GBP had a very flat day on the session as traders took a breather on Thursday. The recent fall has been fairly severe, and the market needed a period of rest. The 0.85 level above giving way was a serious breach of support, and the bias is certainly to the downside. With that in mind, we are selling rallies and new lows. We will not buy the Euro at all currently, and that includes against the Pound.

EUR/GBP Forecast December 16, 2011, Technical Analysis
EUR/GBP Forecast December 16, 2011, Technical Analysis

Dooms Day Continues to Approach the EU

Worries are rippling through debt and stock markets despite  the insufficient measures taken by European leaders last week to help restore investor confidence. Reflecting the tension, rates that banks charge each other for short-term borrowing in dollars continued to balloon, hitting new highs not seen since 2009. Italian government bond yields jumped back above 7%, a level that would crimp Italy’s ability to borrow in the future. Amid the rush for dollars the safe-haven , the euro continues to stay below $1.30 since yesterday. This is the lowest the euro has been in eleven months

The biggest announcement has been that Crédit Agricole SA, France’s third-largest bank, said it will exit 21 of the 53 countries in which it operates to help shore up its finances. Commerzbank AG, struggling to avoid accepting a bailout by the German government, is in talks to transfer potentially bad assets to a government-owned “bad bank.”

Investors worry that the recent steps taken by Europe’s leadership have done little to slow the growing strains across the markets. The concern is that with no solution in sight to the sovereign debt crisis, banks, which hold hundreds of billions of dollars of Sovereign bonds, are at risk of suffering massive losses, threatening to cripple the eurozone’s banking system.

In this climate both investors and banks are demanding higher interest in return for the risk. Some are just refusing to lend. The retreat threatens to create a vicious cycle for the eurozone. Europe is far more dependent on lending from its banks than the U.S. economy, where financial markets play a greater role financing companies and individuals.

European banks are exposed to big potential losses in countries like Italy and Spain. The banks have huge portfolios of government bonds, and an increasingly likely European recession would hurt the value of all their assets.

Fitch Ratings on Wednesday evening lowered its ratings on five big banks from Denmark, Finland, France and the Netherlands. Fitch said the downgrades reflected deteriorating market conditions.

Earlier in the day, focus was on the potential downgrades of sovereign nations, as France’s finance minister played down the potential impact of any downgrade of France’s Triple-A rating.

As the European financial crisis continues to unfold, concerns about the eurozone banking system have mounted. Earlier in 2011, U.S. money-market mutual funds, long important providers of short-term cash to European banking firms, began to reduce their exposures to the region sharply. Banks have been able make up for some of that lost liquidity by borrowing at the European Central Bank. But analysts estimate European banks have more than €700 billion of debt maturing next year that must be refinanced.

European leaders continued to resist some of the sweeping measures investors were seeking—such as the ECB buying sovereign debt en masse, or the creation of a common eurozone bond. Jens Weidmann, president of Germany’s Bundesbank and member of the ECB governing council, said he remained vehemently opposed to the ECB printing money. German Chancellor Angela Merkel reiterated that creating such a bond would be no solution to the turmoil.

Europe’s troubles are weighing on financial institutions around the world. In Australia, Westpac Banking Corp. warned Wednesday that Europe’s debt woes will impact the price and possibly the availability of credit to Australia’s banks.

The world continues to wait on European Leaders, each day the inevitable collapse of the euro becomes more probable and possible. Without a plan of action world must react to force the situation. Time is running out quickly, but European leaders seem to be taking tea.

EUR/GBP Forecast December 15, 2011, Technical Analysis

EUR/GBP fell again on Wednesday as the Euro continues to fall against most other currencies. The problems in the EU continue to worry the markets, and the EUR/GBP speaks volumes as the market isn’t exactly enamored by the Pound either. The candle looks a bit supportive at the 0.84 level, and a bounce would be viewed as a selling opportunity. The 0.85 level could be retested to check for resistance in the near future, and a failure would be a massive sell signal. We are selling rallies, and will not buy this pair.

EUR/GBP Forecast December 15, 2011, Technical Analysis
EUR/GBP Forecast December 15, 2011, Technical Analysis

Central Bank Actions Dec 14, 2011

Norway’s central bank cut its key policy rate by half a percentage point, to 1.75%, in a bid to dampen the effects of financial market turbulence. Norges Bank said market funding for Norwegian banks has also “become more expensive and less accessible.”

International Monetary Fund, Xinhua Zhu Min, said here today that the European debt crisis by drag, slowing world economic growth, this will make the world’s estimated 27 million people into extreme poverty.

Zhu said, the past five, a series of low-income countries suffer from food crisis, financial crisis, and debt crisis in Europe as well as attacks. Face of the first two crises, as 10 to try to build “policy barriers” reduce the budget deficit, current account deficit and foreign debt, low-income country’s economy is still strong growth in sub-Saharan African countries such as 2010 the average economic growth rate reached 5.4%, the performance is quite good.

The Bank of England director Adam Posen said, the bank may need to expand the size of bond purchase program up to 100 billion pounds (about $ 158 billion) to the UK to support the economic recovery process.

Director Posen said in a speech today: “We should be in the next three years on the secondary market to buy at least 50 billion pounds (about $ 79 billion) debt, mainly tend to buy long term the national debt. In view of the future situation is likely to be due to external developments is expected to become worse, I propose a more ‘quantitative easing’ measures, the amount should be 750 million pounds (about 118.5 billion U.S. dollars), or 100 billion pounds. “

The Reserve Bank of Australia released a report today stating that, Central bank intervention in foreign exchange markets has only short-lived results that are of limited value, according to a report from.

The report reviews each period of intervention by the Reserve Bank of Australia since the nation’s currency was floated in 1983. It says the foreign-exchange market has evolved to where participants are now better equipped to manage their own risk. As a result, intervention has become less frequent and more targeted, and should be reserved chiefly for periods of market dysfunction.

The bank, using regression analysis, also gauges the effectiveness of its past interventions, concluding that the results illustrate the inherent limitations of intervention, which it says policymakers need to be aware of.

The Peoples Bank of China may continue to lower the reserve requirement ratio for banks and even cut interest rates next year, as the government shifts its policy priority toward stabilizing economic growth, the state-run China Securities Journal said in a front-page editorial Thursday.

“The growth rate of its money supply and the new Yuan loans issued by Chinese lenders in 2012 will likely increase moderately from 2011,” the influential financial newspaper wrote.

The editorial was in response to the conclusion Wednesday of the Central Economic Work Conference, a key annual policy setting meeting, during which the country’s top leaders pledged to maintain economic growth and social stability next year amid a deteriorating global economic climate.

The Reserve Bank of India, facing mounting evidence of slowing growth and risks of a spillover from the crisis in Europe, is widely expected to pause its monetary-tightening campaign on Friday.

But the rupee’s slide to record lows and persistent inflation pressures mean that unlike most emerging-markets central banks, the RBI isn’t expected to start cutting interest rates any time soon.

US Federal Reserve reiterated that the fed funds rate at zero to 0.25 percent level at least until mid-2013 the same, in order to stimulate employment and economic recovery in the United States.Announcing that they will continue to sell U.S. short-term government bonds, and buying mortgage-backed securities and reinvest the principal policies to buy more Fannie Mae, Freddie Mac and other institutions to issue agency mortgage-backed securities to help depressed real estate market.

European Central Bankpolicymaker Christian Noyer said on Thursday that a downgrade of France’s AAA credit rating would not be justified and ratings agencies are making decisions based more on politics than economics. may n$

Global Sell Off – Euro and GBP collapse Markets plunge

Today seemed to be the day that investors wanted to make sure they were heard loud and clear. They were shouting at the top of their voices to the leaders of the EU, who continue to turn a deaf ear.

Today David Cameron went on the attack, defending his position and his veto of the new EU treaty last week. Angel Merkel spent the day trying to pump up the new vision of the EU as well as bringing the UK back into the picture. Merkel spent the day saying that the UK was very much part of the EU, while David Cameron insisted that the UK would not give up any of its sovereignty.

President Sarkozy of France, on the other hand, spent a good part of his day dealing with France’s rating downgrade and the problem facing French banks.

President of the European Council Herman Van Rompuy spent much of his day trying to put spin on the fact that now the remaining 26 members of the EU have agreed to support the new pact, but the fact remains that many have to get their parliament’s approval and that is not going to be as easy as they think.

President of the European Central Bank Mario Draghi and Head of the International Monetary Fund Christine Lagarde have spent their day, trying to figure out how they can aid the ailing banks and governments, but both have said they stand ready and are supportive of the EU efforts, but they both need to see a clear cut plan. Both Banks have made it clear that they might have trouble raising the necessary funds or taking the actions that the EU is hoping for.

 

Meanwhile in debt stricken countries bond sales have continued albeit at high interest rates, which have dropped from their highest level a week ago.

It seems everyone in the EU is very busy but no one seems to be dealing with the short term crisis… which is quickly moving to an emergency.

Investors are hoping that the markets will wake up these leaders to see what is in front of their faces. Global Markets were dropped, along with the Euro and the Sterling, as Gold followed suit.aling with the short term crisis… which is quickly moving to an emergency.

 

 

 

 

 

Is the Euro Down for the Count

The euro-currency dropped below $1.30 for the first time since Jan. 12 reinforcing market fears that last week’s summit of EU leaders has not gone far enough to fix the currency. The euro touched as low as $1.2994

The euro has managed to hold its own during the debt crisis, only dipping slightly when faced which each new emergency. Despite rising concerns over the level of government debt in a number of countries, actions by the ECB and the EU seemed to keep the euro safe. The agreement last week to get the economies of the euro-zone countries more aligned has met with skepticism in the markets. For the week prior to the summit, investors and politicians were warning EU leaders Sarkozy and Merkel that they were running out of time. They needed to present a roadmap for pulling Europe out of the grips of depression; instead, the only dealt with long term solutions to prevent a crisis from happening in the future.

Their long term “fiscal pact” will take months to be approved by the 17 euro nations regardless of the other 10 nations of the EU. This pact was not even a final draft but a proposal and set of rules and regulation. Already many of the nations are having problems within their own country getting these new rules accepted.

Chancellor Merkel, yesterday, stood firm and would not budge on the amount of funds to be raised by the EFSF, keeping it much lower than the amount the markets need to be assured of keeping the troubled EU countries from defaulting.

The IMF is also running into problems with the rules and regulations of how they accept funds and loan funds. Many of the countries that are willing to add to their deposits with the IMF want assurances on how the money will be used. The general account where the money is held, cannot be specified for specific countries and the funds would be available as the IMF deems fit, along with the US who has veto power over all loans.

Investor’s nerves are rubbed raw; they are running for high ground, assured that Europe will remain in a recession until 2013; most investors are pulling money away from Europe and businesses that depend on Europe for their revenue.

European banks have been promised liquidity by the ECB, but there is a limit to the funds and the assistance that the ECB can provide.

Time has run out and Merkel and Sarkozy just do not seem to be aware of.