One Week to Develop Debt Crisis Solution Plan | IFCM
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One Week to Develop Debt Crisis Solution Plan - 17.10.2011

US Dollar Asian stocks were mainly supported on Monday, extending the global rally, while Treasuries fell as the Group of 20 officials welcomed over the weekend the European progress in developing program to solve the euro-region debt crisis. Relatively safe Treasury securities declined on Friday, sending the 10-year yields to the highest since August – 2.25%. By the end of the last week US stocks gained ground as well amid better-than-expected macroeconomic statistics. The most representative S&P 500 stock index added 1.74% on October 14, after reports showed retail sales advanced in September more than analysts initially estimated, easing concern the world’s biggest economy will slow. US retail sales gained 1.1%, showing the biggest advance since February, and followed a 0.3% gain in August. Today as well the data may show that industrial production in the US advanced in September for a fifth consecutive month: production at factories, mines and utilities has probably increased by 0.2%. The dollar gained some ground in Asian trading hours today, erasing a small part of last week’s losses. The dollar index, which reflects the unit’s behavior against a set of six US major trading partner’s currencies, fell on Friday to a one-month low - 76.50. Euro The euro climbed as well to a one-month high against the dollar on Friday (1.3893), but fell this morning to 1.3830. The single currency is mainly supported by expectations that European leaders will be able to stem the region’s crisis. However there are growing concerns that they are running out of time, while the Group of 20 meeting, which gathered finance ministers and central bankers set the October 23 summit of European leaders in Brussels as the deadline for the development of a rescue program. “The risk of a recession would be increased dramatically were the Europeans to fail to accomplish goals that they’ve set for themselves,” Canadian Finance Minister Jim Flaherty said. On the other hand German Finance Minister Wolfgang Schaeuble reiterated that “We’re aware of our responsibility,” and “We’ll solve the problems in the euro zone.” The leaders will have to find agreement on the scope of the private sector participation in Greek rescue plan, on the capacity of the European Financial Stability Facility and on the program of European bank’s recapitalization. Greece is also facing this week another parliament approval of new austerity measures, aimed at reducing budget deficit and receiving more international financial assistance. A lot, if not everything, will be decided for Greece this week, according to the country’s finance minister. Australian Dollar The Australian dollar strengthened against the greenback to a one-month high (1.0343), but the growth was limited today as well, as the central bank is expected to release tomorrow its October 4 policy meeting’s minutes, when the rate was left unchanged at 4.75%, but Governor Glenn Stevens signaled that “an improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary.” In Asian trading hours the aussie remained almost flat at 1.0283-1.0341.
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