After the Greek prime minister abandoned the referendum on the bailout plan, the risks of a default were considerably reduced, improving the outlook for the European economy and the end of the debt crisis.
Yet the Greek Prime Minister George Papandreou will face a confidence vote today. If he loses the vote a national administration under a new premier will be formed and an election will be held in 3 weeks.
Europe’s debt crisis continues to dominate the financial markets as well as the talks within the G20 chiefs who began a meeting in nCannes,France, yesterday. Nervousness and risk aversion is still seen in the currency market.
Yet the stock markets gained today where the MSCI Asia Pacific Index rose by 2.5% at 14:26 inTokyo, while in Europe FTSEE 100 rose by 0.46% while the CAC 40 rose by 0.13% as of this writing.
The euro is still affected today the ECB’s unexpected rate cut yesterday to 1.25% that aims to sustain the economy which is facing the risks of a mild recession according to the ECB’s president Mario Draghi.
Investors will also watch closely the U.S. unemployment figures for Oct. expected to indicate that the jobs sector is still weak. In Germany the PMI services fell to 50.6 in Oct from 52.1 previous. In Europe the PMI services fell to 46.4 in Oct.
The single currency is almost unchanged as of this writing trading around 1.3819, while the pound is trading around 1.6005 falling from the highest today of 1.6044. The yen is almost unchanged around 78.02.
The dollar index gained trading around 76.79 as of this writing, while the AUD fell to 1.0370 after the RBA cut its growth forecasts. The CHF weakened today trading around 0.8865 after the foreign currency reserves numbers fell in Oct.
As the dollar strengthened, gold fell today to $1756.15 per ounce from the highest of $1764.25 per ounce. Oil however is holding above the $94.00 per barrel level on hopes the US economy will be improving.
