Euro Remains Stable Across The Forex Markets

The single European currency remained almost stable against the dollar Tuesday lunch and 1.3766 dollar the euro, clawing it symbolically 0.01%. In Focus: The vote by the Italian Parliament’s law enforcement budget for 2010 which, if negative, would mean the fall of the Berlusconi government, but also the organization of early elections in several months.

The euro is also evolving within narrow margins against sterling (- 0.08% to 0.8568 euro book), yen (- 0.09% to 107.45 yen, the euro).

After the dramatic events of the Greek end of last week, and the departure of George Papandreou, the announcement of the formation of a government of national unity is rather reassuring. It removes the prospect of a default in the short term. Remains to be seen what will be its composition and its ability to reform, while time is running out and that social pressure is maintained.

“To the Greek press, the former vice president of the European Central Bank, Lucas Papademos, serves as favorite for the post of prime minister. According to Athens, a new government could be appointed within a week, “reported the traders of Pictet & Cie this morning. According to Barclays Stock Exchange, the announcement could even intervene today. But the protagonists seem to already have a hard time understanding.

But after Greece is especially Italy, the third global bond market, which now focuses attention and above all apprehensions. “A brief blip upward (in the euro / dollar) intervened after rumors of a possible resignation of Silivo Berlusconi. The latter having been denied, the single currency has found the way to lower end of the day

Investors seem to expect a release policy in Italy with the vote of confidence in parliament that could bring down Berlusconi. ‘We must recognize that his departure (Silvio Berlusconi) Italy would give greater flexibility to solve its current problems’, a court observer.

“On paper, (Silvio Berlusconi) would no longer have an absolute majority of 316 MPs in the House. Three members of his party, the LDP, rallied to the opposition centrist and a score of ‘unhappy’ of his party openly call for his departure. Today’s vote on the budget execution in 2010 (sic), be difficult. After the surveillance of the peninsula by the IMF and the EU, Brussels announced that his mission would arrive in Rome this week, “recalls his part Aurel BGC.

Note that France announced an austerity plan the second of 7 billion euros in 2012 to be followed by a rise in subsequent years (17.4 billion in 2016). This plan follows one announced emergency in August and amounted to 12 billion in 2011 and 2012. According to Natixis, the second plan is more focused on cost reduction as the first, focused on new recipes.

Here are the yields of government bonds to 10 years for the following countries: Germany (1.82%), France (3.13%) and Italy (6.59%). It is in this case a record, while the rate used by the Italian paper was less than 5% until early July.

While the “spread” (the gap) between the Italian and German rate is now approaching 5 percentage points, reflecting market concern over the ability of the Italian Government to restore order in public finances.

Note however that the French situation is relatively favorable. The spread between government bonds French and German also reflects a deterioration in market sentiment vis-à-vis the state funds hex: it reaches almost 1.30 basis points today, a record, then it was still less than 0.5 in early July.

As for the statistics of the morning, we learned that in September, the German trade surplus grew to 17.4 billion euros while the French trade deficit widened to 6.3 billion and the British industrial production stagnated.

Pictet, we recall that the U.S. side, the issue of public finances is treated politics as more significant than is the case in Europe. Across the Atlantic, “This week marks the beginning of work for the special commission to consolidate public finances. The six elected Republicans and six Democrats were elected until November 23 to present a deficit of about 1200 billion minimum, “said the bank still in Geneva.

Moreover, the Swiss franc (- 0.30% to 1.2365 franc Euro) corrects and returns below 1.24, which was overwhelmed “after an announcement of the Swiss National Bank weaken the Swiss franc, “according to Pictet.

AUDUSD Looking To Fall Further

After the expected decline of a quarter-point rate of Australia allowing the Aussie to fall back on time, graphical configuration calls for a continued rise while the Fed has just revised its growth forecasts and that the Greek Prime Minister waives the proposed referendum.

For the first time since 2009 and after a standstill a year, the Reserve Bank of Australia (RBA) eased monetary policy by returning its key rate to a level of 4.50%. The slowdown in inflation justifies the transition from a strategy of “mildly restrictive” policy to “neutral.” The institution also points to slowing growth in China representing 20% ​​of exports, the fiscal situation in Europe, the decline in commodity prices and the strong Australian dollar.

If the ad allows the currency of the island-continent to breathe, the fundamentals argue for a continuation of the rally began in early October. With an unemployment rate of 5.2% and 1.2% growth in the second quarter despite the natural disasters that have affected the country and part of the mining industry earlier this year the fourteenth world economy shows figures as Europe or the U.S. envy.

Faced with a labor market that is struggling to raise, the U.S. central bank is also reviewing its growth forecasts downwards for 2012, between 2.5 and 2.9%, against a range of 3.3 to 3.7% in June, giving credibility to the hypothesis of new monetary easing measures, which would weigh on the greenback.

Finally, the AUD, backed by risk appetite, should also benefit from the cancellation of the referendum Greek, by Mr. Papandreou conceded under pressure from the couple Sarkozy / Merkel, determined to implement the European aid plan decided on 27 October.

Graphically, after peaking at 1.0750 USD and the announcement of the RBA, the Aussie oscillates in contact with its 20 days moving average, the uptrend remains intact on all horizons. The latter offers retracement and good timing to initiate new long positions with a primary objective to 1.0713 USD.

Wall Street Hit By Uncertain Eurozone

Wall Street has re-shifted sharply downward, while the operators were informed by a dispatch only after an extraordinary cabinet meeting, Papandreou confirmed his proposed referendum and still hoped obtain a vote of confidence of the Greek Parliament.

A high-risk gamble was considered with extreme severity by the markets as the “majority” which he believes may have already no longer exist. The latest rumors from Athens, at least three members of the ruling coalition could defection by Friday (confidence vote) instead of 153 votes, the first Greek Minister would have no more than 150 votes out of 300, an absolutely no flexibility.

Faced with the risk of Greece government by private 72H, which almost automatically lead to a failure (failure of the Brussels Agreement, the risk of contagion from the debt crisis in Italy).

It is almost certain that the IMF, Merkel, Sarkozy will try to dissuade Mr Papandreou to carry out its proposed referendum but the statement released tonight shows that he does not intend to backtrack and assume by advance the democratic rules that can lead to a resignation on the eve of ‘G-20′ (which would be a parting gift that the summit participants would turn to Cannes volntiers).

Wall Street tries to take stock of the enormous uncertainties facing the euro zone and this results in a surge in the VIX from 18% to 35.25 (a score of 25 against 48 hours earlier).