18 January 2012 at 14:57 GMT
The Euro attracted a bid as soon as the story broke that the International Monetary Fund, (IMF), is supposedly going to seek to raise its lending capacity by US$ 500bn to USD 885bn, as it foresees a potential global financing shortfall of USD 1 trn over the next two years.This would obviously entail extending a fairly large-sized begging bowl to all and sundry, with a special focus on the richer emerging market countries, an opportune time to do this being the upcoming 25/26th February meeting of G20 finance ministers and central bankers in Mexico City. Quite understandably, emerging market countries will try to extract a quid pro quo of enhanced voting powers.
UK and American involvement may well be predicated upon further fiscal co-ordination and constraint within the Eurozone and tacit agreement that the European Central Bank, (ECB), would then ramp up its purchases of distressed peripheral debt.To be honest, it all sounds pretty good
news and yet another step towards our prognosis that politicians and central bankers will shortly be pushed into footing the necessary bill to stabilise the Euro. There is too much to lose.
Looking to the day ahead, Greek private sector involvement (PSI) talks resume with Fitch and S&P commenting overnight that a default appears to be an almost foregone conclusion with the question remaining whether it will be orderly or disorderly. March 20 remains a key date with a
Greek €14.5 bln bond repayment due.
UK unemployment figures give mixed signals
The UK saw the release of the International Labour Organisation 3-month moving average measure of unemployment, and this disappointed at 8.4% in the 3 months to November, vs expectations for an unchanged 8.3%. This was the highest figure for 16 years.
However, there was a ray of hope in the shape of the official Office For National Statistics' Claimant Count and Jobless Claims Change numbers for December-these more comtemporaneous figures surprised positively-Jobless Claims rose by only 1200, vs expectations for 7000, and November's figure was revised down to 200 from 3000.
World Bank downgrades global economic forecasts
The World Bank slashed its 2012 growth estimates to 2.5 percent from the 3.6 percent which it had estimated in June of last year and was also pretty clear in its warning that uncertainties surround even this lower projection. However the IMF story seemed to eclipse any concern over the forecast.
Watch out for Industrial Production and Capacity Utilisation figures from the US today, although these tend not to move markets.
Other news
• January Swiss ZEW Investor Sentiment -50.1 vs -72.0 in Dec.
• Yuan firms into Lunar New Year, supported by yesterday's GDP & PBOC mid-point
• Aussie & Kiwi firm against Dollar, retreat from record highs vs Euro
• Zloty rallies, Forint gains before PM speech in Strasbourg
Looking Ahead - Events, Other Releases
• Fed Governor Tarullo testifies in Washington (14.30)
• Canadian Monetary Policy Report (15:30)
• BoC Governor Carney speaks in Ottawa (16:15)
• Italian PM Monti press conference in London (16:15)