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Rehn proposes loosening deficit targets for distressed Member States

European Commissioner for Economic and Monetary Affairs Olli Rehn said today that budget deficit targets for those Eurozone countries where economy is deteriorating significantly could be loosened, as long as they continue implementing structural reforms.

Spain might find itself among these countries as the Euroopean Commision expects the country to register a 8% deficit in 2012, 6% in 2013 and 6.4% in 2014, far from the established limits of 6.3%, 4.5% and 2.8%, respectively.

Speaking before the European Economic and Social Committee Olli Rehn added that “if growth deteriorates unexpectedly, the country may receive extra time to correct its deficit provided it carries out the necessary structural reforms aimed at boosting growth and sustainability in the medium term.”

Forex Flash: USD/CAD with scope for broader up move with limited corrections – TD Securities

The Canadian Dollar continues its recent sub-par trend, being the worst-performing currency in the G-10 block this morning. “Funds closed above 1.01 Monday for the first time since last July and though that likely reflects the very quiet trading seen in holiday-thinned markets to a degree, it sustains the trend of CAD softness seen over the recent past in response to softer Canadian data”, wrote analysts Shaun Osborne and Greg Moore, pointing to the recent undertone as consequence of soft Canadian housing trends amid ongoing domestic  imbalances (after last week’s IMF reported noted that housing prices remained somewhat over-valued and more measures might be needed to curb debt). "Foreign investors are perhaps looking at the Canadian outlook with a more cautious eye now amid concerns that much of the good news is priced in", they added.
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Forex Flash: 10-year US treasuries confined to 1.70-2.10 range – RBS

According to William O'Donnell, an Analyst at RBS, “We continue to see a near term 1.70% to 2.10% range in the 10-year US Treasuries. A key support remains the 2.06-2.10% in 10yrs, and first resistance is 1.90%-1.93%. Watching the ascending bear channel lines (1.93% in 10s and 3.10% in bonds) is important – breaks through could extend the rally while a close above 2.10% in 10s opens up 2.30%.”
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