httpvh://www.youtube.com/watch?v=LlTraT_qBMI

The European periphery is once again in sharp focus this morning as investors wait on key pieces of news from both Ireland and Spain. This has marked back the euro in early trade this morning after it made new 4 and 5 month highs against GBP and the US dollar respectively.

Ireland has been viewed as the new Greece for the past couple of weeks and rumblings in the banking sector and political faux pas have not helped the situation one bit. Ratings agencies have been quick to increase concerns by announcing potential downgrades of bank’s debt and the country as a whole if the banking picture remains dire. This all comes to a crux today as the Irish government announces the total cost of dealing with Anglo-Irish Bank; one, if not the hardest hit of the country’s financial institutions, The government have put the price at €30bn but yesterday Standard and Poors estimated that it could be as much as €35bn, more than the total tax receipts the Irish government receives in 1 year. The announcement will be made sometime today.

As if this wasn’t enough Spain’s sovereign debt has been downgraded this morning by Moody’s citing weak economic growth prospects. The report also predicted significant fiscal deterioration and said that Spain remains vulnerable to further market stress. The country’s CDS, the cost of insuring against a sovereign default, rose slightly in the wake of the announcement but the downgrade had been largely anticipated which prevented further large losses. The outlook has also been kept at stable which is a sign that further downgrades are unlikely.

Sterling has risen against the euro as a result of these announcements but hasn’t had it all its own way overnight as consumer confidence disappointed. Gfk posted confidence at -20 against an expectation of -19 as households grew increasingly pessimistic over their own economic prospects and those of the UK as a whole. We would wager that his is mainly due to the prospect of government cuts and we will have to wait and see if this affects consumer spending. The pound has also had a helping hand from Nationwide house prices which surprisingly rose by 0.1% against a forecast 0.3% fall.

Overnight US lawmakers have sent a message to the Chinese to increase the value of the Yuan. The new bill allows businesses to petition Congress for duties and tariffs on Chinese imports to compensate them for what they see as unfair pricing. The possibility of further ‘beggar thy neighbour’ policies are likely as everyone tries to export their way out of the economic malaise.

Data today continues to focus on Europe with German Unemployment at 08.55 and CPI at 10.00. Eyes then shift to the US for Initial Jobless Claims and US GDP at 13.30.

The European periphery is once again in sharp focus this morning as investors wait on key pieces of news from both Ireland and Spain. This has marked back the euro in early trade this morning after it made new 4 and 5 month highs against GBP and the US dollar respectively.

Ireland has been viewed as the new Greece for the past couple of weeks and rumblings in the banking sector and political faux pas have not helped the situation one bit. Ratings agencies have been quick to increase concerns by announcing potential downgrades of bank’s debt and the country as a whole if the banking picture remains dire. This all comes to a crux today as the Irish government announces the total cost of dealing with Anglo-Irish Bank; one, if not the hardest hit of the country’s financial institutions, The government have put the price at €30bn but yesterday Standard and Poors estimated that it could be as much as €35bn, more than the total tax receipts the Irish government receives in 1 year. The announcement will be made sometime today.

As if this wasn’t enough Spain’s sovereign debt has been downgraded this morning by Moody’s citing weak economic growth prospects. The report also predicted significant fiscal deterioration and said that Spain remains vulnerable to further market stress. The country’s CDS, the cost of insuring against a sovereign default, rose slightly in the wake of the announcement but the downgrade had been largely anticipated which prevented further large losses. The outlook has also been kept at stable which is a sign that further downgrades are unlikely.

Sterling has risen against the euro as a result of these announcements but hasn’t had it all its own way overnight as consumer confidence disappointed. Gfk posted confidence at -20 against an expectation of -19 as households grew increasingly pessimistic over their own economic prospects and those of the UK as a whole. We would wager that his is mainly due to the prospect of government cuts and we will have to wait and see if this affects consumer spending. The pound has also had a helping hand from Nationwide house prices which surprisingly rose by 0.1% against a forecast 0.3% fall.

Overnight US lawmakers have sent a message to the Chinese to increase the value of the Yuan. The new bill allows businesses to petition Congress for duties and tariffs on Chinese imports to compensate them for what they see as unfair pricing. The possibility of further ‘beggar thy neighbour’ policies are likely as everyone tries to export their way out of the economic malaise.

Data today continues to focus on Europe with German Unemployment at 08.55 and CPI at 10.00. Eyes then shift to the US for Initial Jobless Claims and US GDP at 13.30.