Greek breaking point approaches

Given the divisions that were evident between Greece and the IMF last week, we should not be that surprised that they failed to reach agreement yesterday on the latest hole in the budget. This boils down to the simple fact that the IMF does not like, and is not allowed to, lend to a nation unless its debt is on a sustainable footing. EU leaders are trying every which way to try and find some middle ground on which to meet IMF, but the IMF is moving very little from its entrenched position.
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21/11/2012 @ 10:37 GMT

Squaring the troika triangle

Markets have learned to approach meetings of EU leaders with very low expectations, but this week’s offering even managed to fall short even of these. Markets are right to be worried. The disagreements emerging between the IMF and the EU are disturbing because they could mark the beginning of the end of the troika that has backed the bailout programs to date. That would spell disaster for the ability of the eurozone eventually to emerge from the other side of the sovereign crisis.

13/11/12 @ 12:41 GMT by Simon Smith, Chief Economist

Back and forth

Those fresh policy initiatives which emerged from last Friday’s EU Summit continue to be debated ad nauseam amongst European policy officials. After both Finland and the Netherlands threatened to vote against the proposal to allow the rescue funds to purchase troubled sovereigns in the secondary market, EU President Van Rompuy countered by claiming that individual states cannot block the plan unless more than 15% of the eurogroup vote it down. Apparently Angela Merkel and Mario Monti are due to meet in Rome later today to discuss the finer points coming out of the EU Summit.
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04/07/2012 @ 07:07 GMT

Europe's senior moment

We said earlier in the week ‘aim low – avoid disappointment’ and that’s certainly proved to be true. Markets have been pleasantly surprised by the statement issued overnight by EU leaders, although the euro reaction (from 1.2450 to 1.260) reflects the low level of expectations rather than the quality of the statement. Once again, this has come about on a German (and also Finnish) U-turn. Most significantly, debt issued to support the Spanish bank rescue is now going to be ranked alongside (rather than senior to) existing sovereign debt when the EFSF is subsumed into the ESM.
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29/06/2012 @ 07:29 GMT

Making sense of the EU Summit maze

Although the general expectation is that not much of substance will emerge from this, the 19th EU Summit since the debt crisis began more than two years ago, nevertheless there will be some progress in a few areas. As such, both traders and investors need to be aware that the risk in the short term is that policy-makers will make out that they have taken some critical decisions, which may trigger some short-covering in the single currency.

28/06/12 @ 12:19 GMT by Michael Derks, Chief Strategist

A busy time for global policy-makers

Prior to their summer vacations, global policy officials have an extremely busy agenda as they attempt to stabilise Europe’s banking and sovereign debt crisis.
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18/06/2012 @ 09:57 GMT

Europe’s impossible dream

Probably not by accident, yesterday’s Brussels dinner party of EU leaders ended too late for the European press to pass judgement. There was a weight of expectations, which was largely misplaced given this was an informal meeting to pave the way for the main summit of leaders at the end of next month. The same differences remain on common bonds and the financial transaction tax (UK opposing) and more subtle differences on the growth agenda.
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24/05/2012 @ 07:21 GMT

Friday a dim day for the dollar

Friday was a remarkably dim day for the dollar, and yet apart from ‘flows’ it was no easy task to pinpoint an exact trigger for it. During the early afternoon there were some large sell orders for the greenback, especially against the euro – the single currency almost touched 1.32 at one point, after declining to 1.3050 earlier. Sterling did even better, with cable climbing from under 1.57 to above 1.5850. The dollar index, which had seemed rather comfortable above 80 over recent days, suddenly and rather inexplicably found itself below that level.
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19/03/2012 @ 08:08 GMT

Fiscal compact resistance

Increasingly apparent over recent weeks is that some national parliaments at balking at ratifying Europe’s fiscal compact. In France, Socialist opposition leader Hollande has already promised that he will seek to renegotiate the pact should he be elected in the upcoming Presidential election; he currently leads Nicolas Sarkozy in the polls by a comfortable margin although the gap is narrowing. Ireland has decided to hold a referendum on the treaty closer to mid-year and in the Netherlands there is opposition to the treaty from both of the contenders for the leadership of the Labour Party.
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16/03/2012 @ 11:24 GMT

Signs that Germany is shifting

There were no great surprises at yesterday’s meeting of EU finance ministers, but some positive noises. The battle lines over Spain’s deficit were drawn and re-drawn, resulting in a shift of this year’s target from 4.4% of GDP to 5.3%. Still, the Spanish government was shooting for 5.8% and now faces a monumental task in delivering the required austerity against the backdrop of an economy flat on its back.
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13/03/2012 @ 08:29 GMT