Market Vibrations: News and Commentary from the Europe Desk (1240 GMT)
1240 GMT: A Greek spokesman is coming on air saying new austerity measures are conditional on receiving more aid, and on the PSI debt swap deal. This comes after Papademos earlier today annouced he would call a meeting today or tomorrow to attempt to push more austerity measures through. In other news, EURUSD is spiking up some 40 points and is now toeing the 1.3200 area.
1135 GMT:Debt auctions out of Germany and Portugal have produced solid results, with Portuguese summer 2012 bills reaching targets and narrowing down to around 4% from almost 5% in min January. German 10-year yields were at 1.82%, down from 1.93% previously. Meanwhile, Italy's Grilli has said he is confident that with a balanced budget, Italy will cut debt. He added that current weak GDP forecasts don't reflect reforms. The Bank of Italy has said that loans in Q1 2012 will continue to reflect a strict set of terms. In France the top opposition candidate Hollande has confirmed his opposition to the EU fiscal compact, saying it doesn't provide an adequate unified mechanism for growth and employment.
1020 GMT:Flash Inflation remained steady in Europe in January as European companies struggled with rising costs and weakening demand, suggesting that at this point, companies are still bearing the brunt of the credit crisis. Consumer price index in the 17 nations that use the Euro came in at 2.7%, which was the same as the median forecast predicted by a team of economists. Meanwhile, the EU fiscal compact has taken a bashing from the Financial Times which points out that EZ economies are interconnected, thus output in one nation depends on demand in another, so if peripheral nations are to become more competitive then the core nations must become less so.
0905 GMT: Eurozone and Swiss PMIs are in (actual, projection, previous):
0755 GMT: Greek PM Papademos has said he will call an emergancy meeting today or tomorrow in an attempt to force through more extensive austerity measures which have been demanded by the Troika. Calls for a cut to minimum wage have been particuarly tough for Greeks to stomach and Papademos faces opposition to more austerity measures. Meanwhile, the German FinMin Schauble has said that Germany assumes the EUR500bln firewall provided by the ESM will be enough to quash debt concerns, adding that any addition aid will be conditional on Greece meeting its structural obligations. Schauble also praised Italy's Monti for making "great progress." UK nationwide house prices have come in at -0.2% on the month, as expected. The yearly number was 0.6% vs. the expected 1.2%.
0630 GMT: As the European session opens this morning, currencies appear to be contemplating a full on reversal towards a bearish resumption. Asian session highlights included warnings of “turmoil” from the Bundesbank in the event of a Greek default; the bank also added that it still believes very strongly in the Euro future. Moreover, rising Chinese PMIs in January may well affect the correlated Aussie Dollar going forward, while Japanese wages remain locked in a downtrend. Stay tuned for European PMIs later this session as well as the EZ CPI estimate.
Market Vibrations is a new DailyFX feature which follows the European trading session with real-time updates and breaking news and analysis. It is updated regularly, so check back for the latest FX developments.
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