• Instability in Europe
  • Cameron’s negotiation demands
  • Chinese inflation low
  • Obama talks trade

This morning the Euro dropped against most other currencies as whispering of turmoil in the Eurozone have captured the public’s attention.  The old crises of Greece that seem so distant have resurfaced with yesterday’s failure to agree on an immediate release of funds to recapitalize banks.  This has brought back fears of instability in the region in conjunction with Portugal’s current political environment. Currently some parties are trying to reject a government program proposed by the Prime Minister. If they succeed this will cause some restructuring of the current government and it is expected that the socialist leader Antonio Costa will rise to power. It is unclear how much market turbulence this would cause, but if today’s number are any indication the Euro could tumble further.

Adding to the uncertainty in Europe is the UK Prime Minister Cameron.  The PM won his seat, in part, on the promise that he would put up a referendum to determine the status of Britain in the EU.  Keeping good on this promise Cameron, has now set out his demands for negotiations ahead of this vote which will take place before the end of 2017.  The pound is down slightly this morning ,but it is not clear if this is more due to Cameron’s comments or Eurozone instability.

On the other side of the world Chinese inflation data came in soft last night at 1.3%, lower than the expected 1.5%.  CPI for China fell 5.9% YoY, marking the 44th straight month of decreases. A possible bright spot for the region: US President Obama has continued to push the Trans-Pacific Partnership trade agreement which would allow for less restricted trade with the Asian and Australian markets and could help Chinese exports.

EURUSD: Euro down quite a bit this morning on uncertainty of the stability of the Eurozone as old issue flare up in the less secure economies such as Greece and Portugal.

GBPUSD: The pound is also down slightly on the Eurozone fears coupled with Cameron’s comments on the proposed EU membership referendum for the UK.

AUDUSD: Aussie dollar is down this morning as Chinese inflation came in less than expected which opens China up to additional stimulus from the government.

USDCAD: Canadian is quiet this morning, although it has lost some ground against the USD in normal market fluctuations. CAD is in its lowest range of the past 10 years!