The Euro was experiencing further new lows against other major currencies this afternoon against a backdrop of renewed fears of sovereign debt. Around 12:30, the euro and yielded 0.79% against the dollar at 1.3515 dollar per euro.
Same story on the side of the yen, where the decline of 0.77% brings parity yen / euro to 104.18, and against the pound (- 0.47% to 0.8528). In contrast, the euro gained ground against the Swiss franc (+ 0.21% to 1.2401 franc Euro). “The comments of Jean-Pierre Danthine, the Swiss National Bank (SNB), reminiscent of his colleagues and the Swiss economy is still in a critical situation,” said a trader this morning.
Nevertheless, fears of spread of the crisis are divided European sovereign forward markets, as evidenced by the renewed rise in interest rates on Italian state funds to 10 years settling back to a little over 7% this afternoon, against just over 6% in early November. The French rate on 10-year OATs also tend to be 3.60%, against 3% earlier this month.
In contrast, the rate used by the equivalent German Bund was down to 1.75%. Consequently, the “spread” (difference of comparable rates) between Italy and Germany is close to 5.2 percentage points (against less than two points early July), when it reached with France now 1 84 point (against less than 0.5 in early July). All things being equal, “enlargement” of the spread France / Germany is from the beginning of July, much faster than the spread Italy / Germany.
In addition, and while they were relaxed to 5% until early October, the Spanish rates are also left sharply, to 6.3% today.
Now that the Greek and Italian governments of MM. Papandreou and Berlusconi had been discharged and their successors, MM. Papademos and Monti, seeking their brands, market attention is focused on others. Such as Spain, where elections are due Sunday, or France, another major European bond market.
As reported by the traders of Pictet & Cie, “Angela Merkel said yesterday that Europe is now experiencing a situation as difficult as that of the period following World War II. If the euro fails, Europe will have also failed, and Germany is also in a critical situation. ”
In addition, the latest figures are not very engaging. Thus, we learned this morning that the morale of the German economic players fell for the ninth consecutive month in November, according to the latest survey by the ZEW economic research institute. The ZEW index released this morning shows a decline of 6.9 points to -55.2 this month, well below its historical average of 25 points, but in line with average expectations. This is the lowest level since October 2008, the period that followed the collapse of Lehman Brothers. According to the ZEW, the deterioration is mainly due to the political and budget of Italy and Greece.
Moreover, in the third quarter, GDP in the euro area rose by 0.2% over the previous quarter, according to flash estimates published by Eurostat. During the second quarter of 2011, the growth rate reached 0.2% as well. In both cases, these figures are in line with expectations.
A North European trader indicates that risk aversion is increasing especially since the policy of the ECB remains undecided. ‘The ECB should keep buying government bonds to buy large amounts of state funds in Italy, Portugal and Greece in order to bring down the rates,’ he says. In addition, no further announcement has been reached on the European Financial Stability Fund (EFSF).
This afternoon, from the United States, primarily expected retail sales for October, expected up 0.3% after 1.1% in September, according to the consensus.
