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German gloom pressures shares, central banks eyed

LONDON (Reuters) - A gloomy assessment of the business climate in Germany kept European shares under pressure on Monday, but moves were capped ahead of a meeting of central bankers at the end of the week which could point toward fresh stimulus measures.

The latest Ifo index, which is compiled from a survey of some 7,000 German firms on economic conditions, fell in August to its lowest level since March 2010 as the euro zone crisis and a slowdown in China took their toll.

"It looks as if the German economy will, at best, be treading water in the coming months," Carsten Brzeski, senior economist at ING.

The euro zone's blue chip Euro STOXX 50 index <.STOXX50E> was down about 0.1 percent after the Ifo data at 2,431.10 points, although volumes were thin as the British market, Europe's largest, was shut for a public holiday.

The main German stock index (.GDAXI) was little changed, recovering some of its earlier losses, as some of the Ifo institute's findings were not as bad as many feared.

The euro also rose to $1.2530 after the Ifo survey was released, up 0.15 percent on the day, but was holding below a peak of $1.2590 set last Thursday.

Analysts said the weaker outlook in Europe's biggest economy could also support political efforts to find a solution to the region's fiscal crisis, in part by supporting arguments made by German Chancellor Angela Merkel and European Central Bank President Mario Draghi.

"The declining growth rate in Germany shows that the country is not immune from the general slowdown in Europe and outside Europe," said BNP Paribas economist Dominique Barbet.

"This could help Merkel and Draghi convince German people that more efforts to support the euro zone are necessary and are in the interest of Germany."

TIGHT RANGES SEEN

But risk assets were expected to stay in a tight range this week as investors watch for clues on the next steps to tackle the euro area's debt crisis, and wait to see what emerges from a key gathering of central bankers at Jackson Hole, Wyoming on Friday.

ECB chief Draghi signaled earlier this month that the bank may start buying government debt to reduce crippling Spanish and Italian borrowing costs, comments that fuelled a broad-based upturn in sentiment on global markets.

However, over the weekend the powerful German Bundesbank chief Jens Weidmann likened the ECB's bond-buying plans to a dangerous drug, pointing to mounting unease over the policy.

Markets have also been unsettled by rising talk of a Greek euro zone exit which have bubbled up again in recent days [iD:nL5E8JQ6JZ]

With the ECB's next policy meeting not until September 6, most attention is now on Friday's central bankers meeting, and a speech that day by U.S. Federal Reserve chairman Ben Bernanke.

Talk of more accommodative monetary stance from the Fed has grown in the wake of data showing the U.S. economy struggling under the twin impact of the euro zone crisis and a slowing Chinese economy.

The speculation has helped the FTSEurofirst 300 index of top European shares (.FTEU3) rise by about 7 percent in August, while the S&P 500 index (.SPX) is up around 2.3 percent.

On Monday, gold was at its loftiest levels since mid-April, at around $1,676.45 an ounce, due to the strength of the view that a further monetary easing from the Fed is imminent.

Oil has also risen sharply, with Brent climbing above $115 per barrel on Monday, although it was also given a lift from supply concerns as Tropical Storm Isaac threatened to interrupt most U.S. offshore oil production in the Gulf of Mexico.

Aug 27, 2012 07:43

OctaFX.Com News Updates

[OctaFX_Farid]

German gloom pressures shares, central banks eyed

LONDON (Reuters) - A gloomy assessment of the business climate in Germany kept European shares under pressure on Monday, but moves were capped ahead of a meeting of central bankers at the end of the week which could point toward fresh stimulus measures.

The latest Ifo index, which is compiled from a survey of some 7,000 German firms on economic conditions, fell in August to its lowest level since March 2010 as the euro zone crisis and a slowdown in China took their toll.

"It looks as if the German economy will, at best, be treading water in the coming months," Carsten Brzeski, senior economist at ING.

The euro zone's blue chip Euro STOXX 50 index <.STOXX50E> was down about 0.1 percent after the Ifo data at 2,431.10 points, although volumes were thin as the British market, Europe's largest, was shut for a public holiday.

The main German stock index (.GDAXI) was little changed, recovering some of its earlier losses, as some of the Ifo institute's findings were not as bad as many feared.

The euro also rose to $1.2530 after the Ifo survey was released, up 0.15 percent on the day, but was holding below a peak of $1.2590 set last Thursday.

Analysts said the weaker outlook in Europe's biggest economy could also support political efforts to find a solution to the region's fiscal crisis, in part by supporting arguments made by German Chancellor Angela Merkel and European Central Bank President Mario Draghi.

"The declining growth rate in Germany shows that the country is not immune from the general slowdown in Europe and outside Europe," said BNP Paribas economist Dominique Barbet.

"This could help Merkel and Draghi convince German people that more efforts to support the euro zone are necessary and are in the interest of Germany."

TIGHT RANGES SEEN

But risk assets were expected to stay in a tight range this week as investors watch for clues on the next steps to tackle the euro area's debt crisis, and wait to see what emerges from a key gathering of central bankers at Jackson Hole, Wyoming on Friday.

ECB chief Draghi signaled earlier this month that the bank may start buying government debt to reduce crippling Spanish and Italian borrowing costs, comments that fuelled a broad-based upturn in sentiment on global markets.

However, over the weekend the powerful German Bundesbank chief Jens Weidmann likened the ECB's bond-buying plans to a dangerous drug, pointing to mounting unease over the policy.

Markets have also been unsettled by rising talk of a Greek euro zone exit which have bubbled up again in recent days [iD:nL5E8JQ6JZ]

With the ECB's next policy meeting not until September 6, most attention is now on Friday's central bankers meeting, and a speech that day by U.S. Federal Reserve chairman Ben Bernanke.

Talk of more accommodative monetary stance from the Fed has grown in the wake of data showing the U.S. economy struggling under the twin impact of the euro zone crisis and a slowing Chinese economy.

The speculation has helped the FTSEurofirst 300 index of top European shares (.FTEU3) rise by about 7 percent in August, while the S&P 500 index (.SPX) is up around 2.3 percent.

On Monday, gold was at its loftiest levels since mid-April, at around $1,676.45 an ounce, due to the strength of the view that a further monetary easing from the Fed is imminent.

Oil has also risen sharply, with Brent climbing above $115 per barrel on Monday, although it was also given a lift from supply concerns as Tropical Storm Isaac threatened to interrupt most U.S. offshore oil production in the Gulf of Mexico.

Aug 27, 2012 07:43

OctaFX.Com News Updates

[OctaFX_Farid]

Dollar Remains Higher Versus Yen Before Confidence Report

The dollar remained higher following a two-day advance against the yen before U.S. reports that economists say will point to improvement in consumer sentiment and regional manufacturing.

The greenback also maintained a gain versus the euro before Federal Reserve Chairman Ben S. Bernanke delivers a speech on Aug. 31 at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming. Demand for the euro was limited ahead of German data forecast to show consumer sentiment will fall for the first time in three months.

"The market may be open for disappointment" at Jackson Hole, said Derek Mumford, a director in Sydney at Rochford Capital, a currency risk-management company. "Assuming there won't be significant quantitative easing, then the U.S. dollar could have quite a strong performance in the next couple of months."

The dollar traded at 78.77 as of 7:54 a.m. in Tokyo after rising 0.3 percent in the past two sessions to 78.74 yesterday. It was little changed at $1.2504 per euro after a 0.1 percent gain in New York. The common currency traded at 98.47 yen after losing 0.2 percent since Aug. 23 to 98.43.

The Fed Bank of Richmond is forecast to say today that its factory index for the region advanced to minus 10 this month from minus 17 in July, according to the median estimate of economists surveyed by Bloomberg News. A reading of less than zero signals contraction.

Confidence Improving

A gauge of U.S. consumer confidence probably rose to 66 in August, the highest since April, from 65.9 last month, a separate poll of economists shows. The Conference Board is scheduled to release the data today.

Bernanke probably won't use his Aug. 31 speech in Jackson Hole to suggest a third round of bond buying is at hand, according to economists including Michael Feroli at JPMorgan Chase & Co. in New York and James O'Sullivan at Valhalla, New York-based High Frequency Economics. Fed policy makers, who meet next on Sept. 12-13, are closely monitoring unemployment and other data and have been divided about whether to spur expansion.

GfK's index of German consumer sentiment is likely to decline to 5.8 in September from 5.9 this month, according to economist projections taken before the market research company reports the figure today.

Aug 27, 2012 23:26

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OctaFX.Com - Draghi: No going back to old euro ways

ECB head says euro's original setup unworkable, but needed fixes are "within reach"

FRANKFURT, Germany (AP) -- European Central Bank head Mario Draghi says the euro's original setup was unworkable and there's no going back — but argues that ways to fix the 17-country shared currency are within reach.

European officials don't need to set up a complete political union but can repair the currency union through less drastic steps such as stricter central oversight of national spending and tougher scrutiny of banks.

Draghi says in an opinion piece published in a German newspaper that the euro's original 1999 setup — one currency shared by countries that only loosely coordinate their economies — has been discredited by the debt crisis.

Draghi says budget oversight is needed because "the consequences of misguided fiscal policies in a monetary union are too severe to remain self-policed."

Aug 29, 2012 10:09

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Merkel says "absolute political will" to stabilize euro

BEIJING (Reuters) - The euro zone has an "absolute political will" to stabilize the single currency, German Chancellor Angela Merkel said on Thursday after talks with Chinese Premier Wen Jiabao in Beijing.

On a trade row with China over imports of solar modules, Merkel said Germany was not planning a lawsuit against China and that both sides should try to solve the problems through talks. She added that the German government would seek to convince the EU of her approach.

Aug 30, 2012 05:43

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OctaFX.Com -Merkel in control despite allies' Greek cacophony

Merkel allies indulge in sharp rhetoric on Greece, but German chancellor's footing looks firm

BERLIN (AP) -- Chancellor Angela Merkel wants the Greeks to keep the euro. Her vice chancellor says it wouldn't be so bad if they abandoned the common currency. Another ally says Greece should leave the euro club within months.

Merkel's image abroad may be that of Europe's determined taskmaster, but at home the picture has long been less clear: Her coalition government has become notorious for infighting over a range of issues. At first glance, the cacophony over Greece fits that picture — but it shouldn't be mistaken for policy drift.

The chancellor still appears in control of the delicate balancing act she has performed for two years: to help struggling countries that accept tough budget cuts and reforms while convincing Germans she is defending their interests — and wallets.

This week, a prominent lawmaker from a party allied with Merkel made headlines when he declared that Greece should leave the eurozone in 2013 — flatly contradicting Merkel. His party backed down from such talk after she said in a television interview that politicians should "weigh their words."

Her personal popularity and reassuringly level-headed image, along with the opposition's reluctance so far to pick a serious fight, still give her room for maneuver against domestic pressure and foreign governments anxious for Germany to bail out weaker European economies.

Manfred Guellner, head of the Forsa polling agency, said that "people appreciate Merkel and in the end go along with her course" in hopes that the economic problems gripping much of Europe won't affect their lives.

Merkel's government insisted on tough conditions in return for German, and European, support for eurozone strugglers such as Greece and the two other countries that have received bailouts, Ireland and Portugal. With borrowing costs for Italy and Spain worryingly high, more such aid is likely to lie ahead.

Her diligence in demanding budget cuts and structural reforms as the price for German aid may be unpopular in Greece or Italy but it plays well among German voters.

"I think Merkel, whatever she does, will get a majority because the (opposition) Social Democrats and Greens also have to be statesmanlike," he said.

Merkel hasn't come close yet to losing any parliamentary vote on eurozone rescue measures. Although more than 20 coalition lawmakers voted in June against setting up a permanent European rescue fund, she had solid support in the 620-member parliament, with much of the opposition in favor.

The three-year-old coalition of Merkel's conservative Christian Democratic Union, its Bavarian sister, the Christian Social Union, and the pro-market Free Democrats has squabbled endlessly and inconclusively over issues as diverse as tax cuts, privacy laws and highway tolls.

The bickering extends to policy regarding the European debt crisis.

But on Europe, there's a key difference in that the center-right alliance agrees on the broad outline: It's united by distaste for pooling Germany's debt with that of southern strugglers and of making open-ended commitments to help them with economically sound Germany's check book. The opposition — as well as many private economists — argues for pooling debt.

Coalition lawmakers broadly agree that Greece shouldn't have more aid money on top of the two €240 billion ($300 billion) bailout packages of which Germany has been a key financier and that Athens shouldn't be given more time to meet its reform commitments.

Bailing out Greece was never popular in Germany, and frustration with Athens is rising.

Raising questions over Greece's future in the euro offers hopes of political gain to some in Germany's two junior coalition parties, which both face domestic political challenges, though Guellner cautioned that "no party in Germany has ever been able to score points with the euro and the issue of Europe."

The Free Democrats won nearly 15 percent of the vote in Germany's 2009 election, but have slumped to around the 5 percent needed to win seats in Parliament — a contrast with the solid ratings of Merkel's CDU, which consistently leads polls.

Their leader, Vice Chancellor Philipp Roesler, has struggled to turn around their fortunes.

Roesler irked Merkel last fall by talking about the possibility of an "orderly insolvency" for Greece, ignoring heavy hints from the chancellor to drop the subject.

This summer, he said a Greek exit from the euro had "lost its horror." Roesler didn't explicitly call for Greece to leave and Merkel let that pass without comment.

She clearly wasn't amused, however, by a new broadside from the CSU that comes as it prepares for important local elections in Bavaria next year.

Just a day after Merkel asserted, while standing next to Greece's prime minister, that she wants Greece to stay in the eurozone and that others in the coalition do as well, CSU general secretary Alexander Dobrindt was quoted as telling the mass-circulation Bild am Sonntag newspaper that "there is no way past a Greek exit from the Eurozone." He added: "I see Greece outside the Eurozone in 2013."

Aug 30, 2012 06:47

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OctaFX.Com -World stocks drop amid signs eurozone in recession

Stocks slide amid signs eurozone is in recession but US economy not dire enough for stimulus

PARIS (AP) -- World stock markets slid Thursday after a survey suggested the eurozone is in recession and as a modest pickup in the U.S. dashed hopes for more stimulus from the Federal Reserve.

A successful bond sale in Italy — which eased concerns that the country's borrowing rates are spiraling out of control — wasn't enough to buoy markets, ]although the euro made modest gains. The currency shared by 17 countries rose 0.1 percent to $1.2547.

In afternoon trading in Europe, Germany's DAX was down 0.8 percent to 6,952. The FTSE index of leading British shares, meanwhile, fell 0.2 percent to 5,733, and France's CAC-40 dropped 0.5 percent, to 3,3396.

Trading has been light this week as investors anticipate Fed Chairman Ben Bernanke's speech Friday at an economic symposium that they hoped would indicate Washington is preparing more measures to jump-start the economy. But news that the American economy was picking up damped those expectations. On Wednesday, the Fed's "Beige Book" survey of economic sentiment was fairly positive and the country revised up its growth figures for the second quarter.

The American economy seems to be in an inconvenient middle spot: not growing fast enough to drive down unemployment and spur a global rally, but likely not doing poorly enough to persuade the Fed to step in again.

Ahead of the opening bell, stocks on Wall Street were trending downward. Dow futures were trading 0.2 percent lower at 13,054, while S&P 500 futures were down 0.3 percent to 1,403.50.

Europe, on the other hand, is mired in bad news. August's Economic Sentiment index fell more than expected and suggested eurozone growth could retreat 2 percent this year.

"The survey revealed falls in sentiment in the consumer, services and manufacturing sectors, confirming that the downturn is related to both domestic demand and exports," said Jennifer McKeown, senior European economist for Capital Economics. "And perhaps more worryingly, there is further evidence here of a sharp slowdown in Germany."

Earlier in Asia, the benchmark Shanghai Composite Index dropped to another three-year low on Thursday, losing 0.03 percent to 2,052.58.

Elsewhere, the Tokyo Stock Exchange's benchmark Nikkei fell 1 percent to 8,983.78 and South Korea's Kospi slipped 1.2 percent to 1,906.38. Hong Kong's Hang Seng Index also was down 1.2 percent to 19,545.93, while Australia's S&P/ASX 200 shed 0.9 percent to 4,315.70.

Benchmarks in Singapore, Indonesia and Taiwan also fell.

Aug 30, 2012 11:59

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OctaFX.Com - Australian Dollar Rallied as RBA Kept Rate Unchanged, Global Demand Slows

THE TAKEWAY: RBA kept benchmark lending rate unchanged at 3.50% > RBA concerned over European and Chinese slowing > Australian Dollar rallies after selling off heavily since Aug 9

The Australian Dollar traded higher versus the U.S. Dollar as the Reserve Bank of Australia left their benchmark lending rate unchanged at 3.50% in August. Governor Stevens cited in his statement that “economic activity in Europe is contracting” and that “growth in China remained reasonably robust” through the year, however the “robust” growth appears to have weakened when compared to growth from prior years.

Moreover, Stevens further states that “some commodity prices of importance to Australia have fallen sharply.” Falling commodity prices may perhaps be the single most important concern to the Aussie economy as it signals a key tell on the flagging European growth story. Australia exports iron ore to China and China then uses the ore to produce steel which is subsequently sold to Europe. The slowdown in Europe has resulted in decreased demand for Chinese steel which invariably leads to a commensurate drop-off in demand for Aussie resources. The process ultimately results in less wealth flowing into the Aussie economy. Stevens provides further support by stating “growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.”

The Australian Dollar likely rallied in relief to the larger selling pressure that has broadly taken place since August 9 where the pair lost 3.67 percent versus the greenback over the period.

Sep 04, 2012 05:25

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OctaFX.Com - Euro Looks to EU Chatter for ECB Clues, Dollar May Rise on ISM Data

Talking Points

• EU Policymakers’ Comments in Focus Before ECB Rate Announcement
  
• Dollar May Rise if Stronger ISM Print Weighs Against Fed QE3 Outlook
  
• Australian Dollar Gains as RBA Signals No Hurry to Resume Rate Cuts
  

A quiet economic data calendar in Europe will shift the spotlight to the speaking docket. European Commission President Jose Manuel Barroso is scheduled to speak in Brussels while EU President Herman Van Rompuy meets Germany

Chancellor Angela Merkel and Italy’s Premier Mario Monti sits down with French President Francois Hollande. Traders will monitor regional leaders’ remarks for clues about the possibility that the ECB is preparing to unveil details of its highly anticipated bond-buying scheme at this week’s policy announcement. Signs of progress on this front may help to boost the Euro in the near term, although ultimately the ECB seems likely to disappoint this time around.

The spotlight then turns to the ISM Manufacturing report, which is expected to show the US factory sector held up in August after activity contracted in the preceding two months. Markets are likely to interpret the result through the prism of Fed stimulus expectations after Ben Bernanke was seen as giving a nod to QE3 at the Jackson Hole Symposium last week. The Chairman didn’t give explicit guidance but laid out a case for the benefits of nonstandard policy and stressed the importance of achieving “further progress” on economic growth and job creation, adding that the Fed will provide additional help “as needed”. With that in mind, an upside surprise may weigh on risk appetite while boosting the US Dollar as hopes for accommodation fade, and vice versa.

The Australian Dollar outperformed in overnight trade after the RBA opted to keep interest rates unchanged at 3.50 percent as expected. Governor Glenn Stevens reiterated familiar rhetoric in the statement accompanying the announcement, saying that “the stance of monetary policy remain appropriate” at below-average levels given a subdued international outlook despite growth tracking close to trend and inflation close to target.

The remarks suggested the RBA remained in wait-and-see mode, with policymakers in no hurry to resume interest rate cuts.

Sep 04, 2012 08:50

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OctaFX.Com -Euro edges lower ahead of ECB meeting

LONDON (Reuters) - The euro dipped against the dollar and European shares edged up on Wednesday with investors trading cautiously ahead of a European Central Bank meeting and a U.S. jobs report.

Markets have been expecting ECB President Mario Draghi to unveil a bold plan to tackle to the euro zone's debt crisis at Thursday's meeting, but public disputes among policymakers over the extent of the measures have begun to sow doubts.

Friday's jobs report will provide a reading on the health of the world's largest economy after other data pointed to a global slowdown in manufacturing.

"We might not get all the details about the ECB bond buying plan tomorrow, but we know it's coming, so it's priced in. Now the question is: how bad is the situation in the U.S. economy? We'll get a better idea on Friday with the payrolls," David Thebault, head of quantitative sales trading, at Global Equities.

The single currency was down 0.25 percent at $1.2530, off its Tuesday's high of $1.2629 but not far from Friday's high of $1.26378.

The caution gripping investors ahead of the ECB meeting saw share markets across Europe open lower with the FTSE Eurofirst index (.FTEU3) of top

European shares down 0.1 percent at 1080.30 points.

Germany will sell 5 billion euros of new 10-year bonds with a record low coupon of 1.5 percent later in the session and the sale will give an indication of how concerned investors are about the outlook. German Bund futures were 10 ticks higher at 143.60 ahead of the sale.

Signs of slower factory activity across the United States, Asia and Europe during August have heightened fears about health of the global economy, although this has raised hopes of central bank action to ease monetary policy.

Those hopes kept oil prices near $114 a barrel and gold near a six month high at $1,691.64 an ounce.

Sep 05, 2012 07:55

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[OctaFX_Farid]

OctaFX.Com -Greece Needs to Leave Euro: Economist

Greece needs to leave the euro and reintroduce its own currency if it wants to get back on its feet and return to growth, Manfred Neumann, Professor of Economics at the Institute for Economic Policy at the University of Bonn told CNBC on Wednesday.

The country's dominant tourism industry and exporters simply cannot recover by lowering prices and wages, he said.

"It has to be done by devaluation and therefore they need their own currency," the professor of international economics who supervised German Bundesbank chief Jens Weidmann's 1997 doctoral thesis said.

A decision on whether Greece will receive further aid from international creditors to cover its funding needs will be taken in October. The country needs to demonstrate it is committed to implementing a series of economic reforms.

Other countries may also need to leave, Neumann said, adding that under a very negative scenario in which he does not believe, the entire southern region could have to leave the euro.

"Now with respect to the other countries, I would say... if we are very negative... I'm an optimist, but if you [are] a pessimist, you would say possibly - over the next ten to fifteen years, the whole south has to leave," he said.

Spain had not been governed well, both under its previous socialist government and under the current conservative government, he added. Its high level of unemployment - historically above many of its European peers and now at a staggering 24 percent - could have been tackled ten to fifteen years ago, according to Neumann.

He expressed concern over the European Central Bank's response to the crisis in comments which showed his support for Weidmann, who clashed with the

ECB's chief Mario Draghi over a new bond buying program.

One newspaper report suggested last week that Weidmann was considering stepping down from the ECB board. The Bundesbank chief opposes the program, which is aimed at lowering borrowing costs for heavily-indebted countries facing high borrowing costs, such as Spain and Italy, arguing that the move amounts to a form of monetizing debt, which is illegal.

Echoing this view, Neumann said: "The problem is a change in the whole trend of policy making because up till now, it was forbidden. It was a rule not to buy bonds."

"The understanding when they started in 2010 was... well we have to buy some bonds simply to keep the market floating, to keep them flexible, but meanwhile, it's clear this is not the idea," he said.

He believes the move now amounts to outright support for southern European governments and that it endangers the euro.

He also saw no reason to support the idea of a banking license for the new permanent european bailout fund, the European Stability Mechanism or ESM, allowing it to tap funds from the ECB.

"No, the ESM should not get a banking license because if the ESM gets this license, it would mean the ESM can borrow as much central bank money from the ECB as ESM wants to. And that would mean monetary policy would effectively [be] handed over from the ECB to ESM. That can't be," he said.

Sep 05, 2012 11:00

OctaFX.Com News Updates

[OctaFX_Farid]

OctaFX.Com - Is Now the Time to Buy Australian Dollar?

The Australian Dollar has fallen sharply off of its $1.0610 peak seen through August, but does the 400+ pip decline offer a buying opportunity?

- Overnight economic data shows the Australian economy failed to accelerate, pointing to downside risks for the Australian Dollar itself.

- Our weekly trading forecast shows Australian Dollar is at clear risk as futures positioning remains extremely one-sided

- Australian Dollar may have topped amidst clear market complacency

The DailyFX Argument for Australian Dollar Long Positions:

- The Reserve Bank of Australia boosted the AUDUSD as it kept interest rates unchanged, giving hope that the Aussie currency would maintain its substantial interest rate advantage versus major counterparts.

- Highly-correlated Gold and Silver prices have broken key technical resistance, offering AUD support.

- Key Fibonacci support may offer an important AUD price floor at $1.0100

Conclusion:

Substantial Australian Dollar declines offer an attractive price at which to get long, but traders should be careful of clear fundamental risks to the AUDUSD currency.

Proprietary Speculative Sentiment Index data likewise shows that the vast majority of retail traders have gotten long the AUDUSD amidst one-sided price moves. There are currently 2.2 traders long Aussie Dollar for every one that is short—a level that has historically coincided with further AUDUSD weakness.

Reward/risk on AUDUSD longs looks attractive, but we can’t advocate joining the retail trading crowd in getting long the fast-falling Australian Dollar.

Sep 05, 2012 13:00

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[OctaFX_Farid]

OctaFX.Com -Analyst responses to ECB's new bond-buying plan

Analysts give their reaction to a new bond-buying plan from the European Central Bank

LONDON (AP) -- On Thursday, Mario Draghi, the president of the European Central Bank, unveiled a package of measures that is designed to ease the strains in Europe's debt crisis and secure the future of the euro currency.

He announced that the central bank was creating a new bond-buying program, called Outright Monetary Transactions. The so-called OMT, which will replace the previous program, will see the ECB buying short-term bonds of of between one and three years and will have no limits.

Countries that have their bonds bought will have to accept certain conditions, which will be part-monitored by the International Monetary Fund. The bond purchases will not increase the money supply in the 17-country eurozone.

Here are some early responses from analysts.

— Benjamin Reitzes, senior economist at BMO Capital Markets:

The ECB did almost exactly what was expected, and in this case that's a positive. Today's announcement should help contain the crisis, but the weak economic outlook looms, and the ECB will need to ease policy further in the months ahead.

— Craig Erlam, market analyst at Alpari:

The next stumbling block will come when the countries request this aid which, as Draghi said, will come with strict conditions. There is likely to be long negotiations over these conditions with (Spanish Prime Minister) Mariano Rajoy and (Italian Premier) Mario Monti unwilling to take anything too severe given the harsh cuts and reforms already undertaken in both countries.

— Jens Larsen, chief European economist at RBC Capital Markets:

The ECB is clearly intent on reducing the risks of very nasty outcomes, but also ensuring that the pressure remains on governments.

—Marie Diron, senior economic adviser to the Ernst & Young eurozone forecast:

The ECB did not disappoint in its decision to start a vast bond purchase program. While we had little doubt that such a program would be announced, some of the details go beyond what we expected.

— Neil MacKinnon, global macro strategist at VTB Capital:

Without trying to be a "party pooper", suppressed borrowing costs certainly provide relief in the short term but do not resolve problems of solvency and debt unsustainability.

— Guy LeBas, chief fixed income strategist at Janney Capital Markets:

The program provides a small measure of additional liquidity support to countries that request and receive a bailout. It is not, however, designed to "rescue" EU sovereigns, but rather to ensure that the deterioration of sovereign credit quality doesn't result in a sharp drop in economic activity/deflation. Don't depend on the OMT as a cure-all for what ails continental Europe.

Sep 06, 2012 14:32

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OctaFX.Com - Asia stocks rally on Europe central bank debt planBritish Pound At Risk Amid Weakening Labor Market, Slowing Trade

BANGKOK (AP) -- Asian stock markets surged Friday, boosted by a highly anticipated European plan to lower the borrowing costs of debt laden Spain and Italy.

Markets shot higher after the European Central Bank announced it was creating a new bond-buying program under which the bank will buy government bonds with maturities of one to three years. There will be no limits to the amount of purchases it can make.

The program — the ECB's most ambitious yet in efforts to halt Europe's financial crisis — is intended to keep the short-term borrowing rates of countries such as Italy and Spain at manageable levels, giving them time to enact debt reduction measures and economic reforms.

Large-scale purchases of short-term government bonds by the ECB are expected to drive prices up while pushing down their interest rates, making it less expensive for financially strapped countries to borrow.

Japan's Nikkei 225 index surged 2 percent to 8,850.49. Hong Kong's Hang Seng jumped 2.4 percent to 19,663.92 and South Korea's Kospi bolted up 2.4 percent to 1,926.42. Australia's S&P/ASX 200 rose 0.2 percent to 4,322.30. Benchmarks in Singapore, Taiwan, Indonesia, New Zealand and Thailand also rose.

Mainland Chinese shares soared. The benchmark Shanghai Composite Index jumped 4.2 percent to 2,138.02 while the smaller Shenzhen Composite Index added 4.2 percent to 895.27.

Wall Street surged Thursday after the plan was announced. The Standard & Poor's 500 index soared to its highest level since January 2008, and the Dow Jones industrial average hit its highest mark since December 2007.

"Hong Kong market is in a very good mood today because of the rally from the Wall Street which is triggered by the ECB new unlimited bond purchasing program announced last night," said Jackson Wong, vice president of Tanrich Securities in Hong Kong.

"Now investors are getting more confidence that the ECB might be able to handle the current situation again. The euro went up above $1.26 and the ten-year bond yield of Italy and Spain went down significantly."

Spain's interest rate on its 10-year bond was down 0.3 percentage points at 6.12 percent after the ECB announcement. Italy's 10-year rate was down 0.1 percentage points at 5.33 percent.

And in an encouraging sign for the American job market, a report from the payroll processor ADP said Thursday that businesses added 201,000 jobs last month, the most reported by the survey since March.

Separately, the Labor Department said the number of people applying for unemployment benefits fell by 12,000 last week to 365,000. That figure won't affect the August jobs report, due out Friday, but could be a sign of better hiring this month.

Japan's powerhouse export sector — with many companies heavily dependent on European sales — enjoyed strong gains. Honda Motor Corp. rose 4.4 percent, and Toshiba Corp. jumped 6 percent. Heavy equipment maker Komatsu Ltd. added 4.9 percent.

Gains in South Korea, meanwhile, were driven by tech shares. Samsung Electronics Co. rose 4.4 percent and LG Electronics added 2.7 percent. SK Hynix Inc. soared 7.7 percent.

Chinese property shares soared. Hong Kong-listed Evergrande Real Estate Group surged 7.1 percent and Shanghai-listed Poly Real Estate was 6.6 percent higher.

Benchmark oil for October delivery was down 63 cents to $94.90 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 17 cents to finish at $95.53.

In currencies, the euro fell to $1.2635 from $1.2643 late Thursday in New York. The dollar fell to 78.92 yen from 78.95 yen.

Sep 07, 2012 02:44

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OctaFX.Com -German media warns unlimited ECB aid could ruin euro

BERLIN (Reuters) - Germany's conservative newspapers on Friday accused ECB chief Mario Draghi of writing a "blank cheque" to troubled euro zone states that could put the entire currency at risk, with top-selling Bild warning his policies could make the euro "kaputt".

The Italian president of the European Central Bank unveiled a new plan on Thursday to lower the borrowing costs of euro zone states like Spain and Italy by buying their bonds.

Germany's central bank opposes the ECB's move. Chancellor Angela Merkel has supported Draghi while insisting Bundesbank chief Jens Weidmann's public criticism of the bond-buying has been useful too.

For the country's conservative newspapers, many of which have taken an increasingly euro-sceptic stance as the three-year-old euro zone debt crisis wears on, Draghi's latest measures went too far.

"Help without end for crisis countries," said Bild on its front cover, adding that Draghi had signed a "blank cheque" and that his policy endangered the independence of the ECB. It cited German politicians saying the ECB had gone beyond its mandate of safeguarding the stability of the currency.

"Draghi sets off Germany's alarm bell," was the headline in the conservative daily Die Welt.

Business daily Handelsblatt, which often voices concern at the financial burden of the bailouts on German taxpayers and business, had a cover story on "the Rise, Fall and Resurrection of the Bundesbank" and gave prominence to Weidmann's warnings.

Inside, Handelsblatt criticized "the democratic deficit of the euro rescuers" - and linked the ECB's chosen path to next week's ruling by Germany's Constitutional Court on the legality of the euro zone's new bailout mechanism and budget rules.

The Frankfurter Allgemeine Zeitung, a sounding board for Germany's monetary hawks, wrote that "the border between monetary and fiscal policy has been blurred" and called the argument that bond-buying was within the ECB's mandate "far-fetched".

Finance Minister Wolfgang Schaeuble, attending an awards ceremony for Draghi late on Thursday, reiterated the government line that using monetary policy to solve the euro zone's fiscal problems could not be a permanent solution.

But senior Merkel MPs like her deputy floor leader Michael Fuchs insisted the ECB was acting within its mandate, telling Reuters:

"As long as there is conditionality, it is okay."

Sep 07, 2012 07:37

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OctaFX.Com - Sterling Rises on News of Improving UK Employment

THE TAKEAWAY: The UK jobless claims falls by 15,000 in August, more than expected -> ILO 3M unemployment rate rises to 8.1% -> Sterling Rises

The jobless claims count among the UK population fell by the most in over two years in August. The amount of people claiming to be out of work fell by 15 thousand, and now total 1.57 million people, much better than expectations for the claim count to remain unchanged. July’s change in jobless claims was revised lower to a 13.6 thousand drop in claims, according to the UK Office for National Statistics.

However, the ILO unemployment rate for the three months that ended with July rose to 8.1%, after a brief drop to 8.0% in June. Although, employment actually rose to 236,000 over the period, the biggest increase in two years. The average weekly earnings during that 3-month period rose by 1.9%, which was slightly better than expectations for a 1.8% earnings growth.

August’s drop in unemployment is surprising when taken in contrast with the three straight quarters of economic contraction recently reported in the UK. It’s tough to say if this is a signal of an economic turnaround or an improvement that will not be sustained.

The British Pound rose with the improved employment numbers; GBPUSD climbed above the key 1.6000 figure. The next resistance could come in around 1.6129, by a year-long downward trending line.

GBPUSD 15-minute: September 12, 2012

Sep 12, 2012 09:32 AM

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OctaFX.Com -Analyst Interview: Christopher Vecchio on the Fed, Canadian Dollar Strength

The big question of the week is if the Fed will launch QE3. What do you think? If the Fed will indeed act, how could they explain their actions? Yields are already very low.

Moving beyond the headlines you see from the media, we need to consider what Chairman Bernanke said at the Jackson Hole Economic Policy Symposium: that nontraditional monetary tools have worked in the past, and the Fed is still open to using them, but there is growing concern among policymakers that implementation of programs previously used might have diminishing returns.

That last part is key for the narrative right now, with US equity markets at multi-year highs and Treasury yields hanging around near all-time lows: what more will unsterilized bond purchases do?

There’s additionally been talk about the Fed implementing some sort of open-ended bond-buying program that keeps the pedal on balance sheet expansion until certain benchmarks in key economic indicators (growth, inflation, labor market) meet predefined levels. Perhaps this is an option; given Chairman Bernanke’s modus operandi in recent years – limited balance sheet expansion and definitive targets for maturity extension programs (QE-Twist) – this would represent a new form of quantitative easing that the Fed hinted at in the July 31 to August 1 meeting Minutes.

I’d like to think that the Fed would implement an entirely different type of program, aimed more specifically at helping the housing sector and the labor market. This would have to fit in the scope of the United States’ consumer-based economy. Anything that would boost disposable income – especially in the face of tax hikes should the fiscal cliff come at the beginning of the near year – would be most beneficial. Although it’s a bit of a counterfactual argument, I tend to think that previous large scale asset purchases (LSAPs) (QE1) and unsterilized bond purchases (QE2) have had little influence over labor market conditions. Many tend to think this is the case as well; that’s part of the reason Chairman Bernanke had to defend nontraditional policy responses at Jackson Hole.

Spain is taking its time with asking for aid, perhaps it is wary of having to undertake more austerity measures. Do you see a possibility that Spain will receive a "soft bailout" or "precautionary program" as the ECB mentioned?

I think that the German ratification of the European Stability Mechanism (ESM) leaves void any risk-positive catalysts out of the Euro-zone over the coming weeks. The idea that Spain will receive some ‘white glove’ sort of treatment beyond the already agreed upon framework is asking a bit much from a reluctant core (still) at this point (though we do note that tones have softened in Germany and in Holland). This concept of conditionality is obviously a big concern because it means that any bond-buying the European Central Bank wants to undertake will not come without international budgetary oversight – just like in Greece. If Spain doesn’t agree to new measures, then it won’t receive bailout funds, and the ECB will stay on the sidelines, pushing borrowing costs back up. It remains to be seen how long the market buys cheap talk from Spanish Prime Minister Mariano Rajoy that Spain will seek help if yields rise, but I doubt it will be more than a few weeks maximum.

Japan has published more disappointing figures, including lower growth and a lower than expected current account. Do you see the yen suffering from weak figures? Or will its moves remain prone to risk on / risk off moves?

While the Japanese Yen is under pressure in its own right given weak economic data, the big picture is that of the big three safe havens (alongside the Swiss Franc and the US Dollar), the Japanese Yen is the best option available. This keeps the focus on the Yen as a proxy to ‘risk-on’ or ‘risk-off’ news. Keeping it short and simple, if the Fed doesn’t undertake a massive bond-buying program that diminishes yields on the Treasuries underpinning the US Dollar, the Bank of Japan will relieve a massive sigh of relief. If the Fed does a QE3-type program (see prior comments), I’d expect the BoJ to be very vocal and active in the markets with its own currency dilution response.

EUR/CHF woke up from the dead and began moving. Is it a result of the euro's rise? Or could the SNB also be behind this move? Do you see the Swiss franc returning to trading independently of the euro?

Rumors were floating around late last week that the Swiss National Bank was readying to raise its floor to 1.2200 in response to the ECB’s new debt monetization scheme (using sterilized bond purchases to lower borrowing costs in Italy and Spain), as the perceived uptake of peripheral debt would pressure the Euro and boost demand for the Swiss Franc.

Although the EURCHF has traded lower in the past few days since the initial spike up towards 1.2200, the SNB’s decision will force a decisive move in either direction: the EURCHF, in my opinion, will be sitting comfortably above 1.2200 or back riding 1.2000 by the end of the day Thursday. A removal of the floor seems unlikely at present time, but it is not something to be ruled out in the future if the crisis eases; the SNB’s foreign currency reserves are heavily weighted towards the Euro and some diversification would do the bank some good.

The Canadian dollar enjoyed rising oil prices, strong employment figures and also hopes of QE3. What could risk the strength of the loonie?At present time…nothing. The Canadian Dollar is a fundamentally strong currency, with both fiscal and monetary policymakers offering prudent guidance that has kept the country well-insulated from financial shocks in the US, Europe, and China over the past four-years. With recent housing data coming in better than expected amid slowing inflation rates, there’s clearly scope for further strength in the Canadian housing sector that could in return buoy the labor market. Right now, the only thing far enough out in the future to consider would be a dramatic ending to the US fiscal cliff situation, as the US as

Canada’s largest trading partner would likely slow imports, damaging the Canadian economy. Fiscal cliff aside, there are few things standing in the way for a strong finish to the year by the Canadian Dollar.

Sep 13, 2012 04:00 AM

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OctaFX.Com -Euro Falls Most in 8 Days - Time to Buy the Dip?

The Euro has lost the most versus the US Dollar (ticker: USDOLLAR) in eight days. Is this the start of a larger pullback or a good buying opportunity? Here are two reasons for why the EURUSD might bounce:

Pros that favor a Euro bounce against the US Dollar

Euro correction in line with what was expected, important EURUSD level at 1.30 offers support

The US Dollar downtrend is intact, and we favor selling as retail crowds remain heavily long

We can’t ignore risks that this could be the start of a long-awaited EURUSD correction, however, and we see two key reasons for which this could be the start of a larger US Dollar bounce.

Cons against buying into the Euro/US Dollar decline

US Dollar may continue to strengthen as Aussie and Euro lead way lower

The US S&P 500 nears a possible reversal, and highly-correlated EUR could decline

We ultimately view a break below the $1.30 mark as somewhat unlikely, and indeed favorable reward to risk on a long position is enough of a reason for this author to take a long EURUSD position against the key level.

Sep 18, 2012 01:45 PM

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Check out OctaFx-Financial News: CLICK HERE

Sep 20, 2012

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OctaFX.Com -Italy, Greece insist on safeguarding eurozone

Italy, Greece insist on safeguarding eurozone as Greece tries to finalize critical cuts

ROME (AP) -- The leaders of Italy and Greece are insisting on the "absolute need" to preserve the eurozone, as Greek politicians struggle to put together an austerity package critical to the country's financial survival.

Italy's Premier Mario Monti met Friday with Greek Prime Minister Antonis Samaras on the sidelines of a political conference in Rome.

A statement from Monti's office said the two leaders reiterated their conviction of "the absolute need to safeguard the integrity of the eurozone, stabilize markets and proceed in the process of European integration."

Samaras' coalition government has yet to agree on the final list of €11.5 billion ($15 billion) worth of cuts so the country can get bailout cash. Without the money, Greece might default and abandon the euro, unleashing new financial gloom across the continent.

Monti was later meeting the leaders of Ireland and Spain.

Meanwhile, Greece's bailout creditors said they are taking a "brief pause" of about one week in talks regarding the country's new austerity program, saying that "good progress" has been made so far.

The officials from the so-called troika of the International Monetary Fund, the European Union and the European Central Bank, also said in a statement that they will continue contacting the Greek officials from their headquarters during that time. The announcement followed talks with Greek Finance Minister Yiannis Stournaras.

An official at the ministry said the departure of the troika representatives from Athens is not significant since they had not initially planned to stay beyond the end of the week.

The debt inspectors from the IMF, EU and ECB have been meeting senior Greek officials since early September, ahead of a crucial progress report that will determine whether Greece keeps receiving vital rescue loans.

But weeks of deliberations among the three parties in Greece's fragile, conservative-led governing coalition have failed to produce an agreement on the final list of cutbacks.

The Greek official, who spoke on condition of anonymity, said Athens hopes to have the list ready by the time the troika inspectors return. He said an agreement was reached earlier this week with the troika on some €9 billion ($11.7 billion) worth of cutbacks — which will include an estimated €1.1 billion ($1.4 billion) from raising the average retirement age from 65 to 67.

He said that in addition to the €11.5 billion cutbacks, which will mostly come from pension and salary cuts, the troika also wants Greece to increase its state revenues by some €2 billion over the next two years.

Greece has depended on international rescue loans since May 2010, and in return imposed a harsh austerity program that saw incomes slashed, taxes repeatedly hiked and the retirement age increased to 65. The belt-tightening, amid a deep recession and high unemployment, has sparked a wave of strikes and often violent demonstrations.

Sep 21, 2012 10:10 AM

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OctaFX.Com - Australian Dollar Correction Could Be Over if Risk Trends Permit

The Australian Dollar had a mediocre week, shedding -1.17% against the top performer, the Japanese Yen, while gaining +0.26% against the worst performer, the Euro. The AUDUSD dropped back by -0.89% as price action was largely dictated by two main themes: a US Dollar rebound; and deteriorating sentiment on China.

With respect to the first point, it looks like the initial reaction to the Federal Reserve’s unlimited quantitative easing program was largely priced in, and an overextended market from a technical perspective warranted a pullback. In terms of the second, data was mediocre at best out of China, but commodity prices tied to Chinese growth – Copper and Iron Ore – were relatively steady. We believe that base metals will be a strong guide for the Australian Dollar (considering that Iron Ore is Australia’s top commodity export), and as long as they remain strong, with the Fed priming the liquidity pump, the Australian Dollar could strengthen going forward. However, this may not be that week, we now hold a neutral outlook for the Aussie until global risk trends pick up.

In terms of data out of Australia this week, there’s not much by way of the economic docket that could really provoke a breakout from its current trend: weak in the short-term, but strong in the medium- and long-term. There is one data release that is of interest, however. On Friday, the Private Sector Credit report for August will be released. According to a Bloomberg News Survey, credit grew at a pace of +0.3% on a monthly-basis, from +0.2% m/m in July. On a yearly-basis, credit growth was up by +4.3% in August from +4.2% y/y in the prior month. If Private Sector Credit is improving as predicted, the Australian Dollar could see a boost.

Looking at the calendar going into the first week of October, we note that there’s a Reserve Bank of Australia Rate Decision coming up on October 2. We thus suspect this will start to drive the Australian Dollar by mid-week. According to the Credit Suisse Overnight Index Swaps, there is a 62.0% chance of a 25.0-basis point rate cut, with 90.0-bps priced out over the next 12-months. Earlier this week, there was a 70.0% chance of a 25.0-bps rate cut, up from a 40.0% chance last Friday. These rate expectations ahead of the RBA are important to watch: if they show a greater likelihood of a rate cut, the Australian Dollar will depreciate.

Given the psychology surrounding the Australian Dollar and China right now, any positive signs out of either country could provide some much needed relief; and if US equity markets rally again, so too will the Aussie.

Sep 22, 2012 01:27 AM

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OctaFX.Com - British Pound Looks to Spain Event Risk, US Data for Direction

A limited stock of noteworthy homegrown event risk leaves the British Pound at the mercy of larger market themes in the week ahead. Broadly speaking, traders remain primarily concerned with quantifying the degree of slowdown in global economic growth over the coming quarters as well as financial stability in the Eurozone.

On the growth front, US economic performance is in the spotlight once again. Consensus forecasts continue to suggest output growth will accelerate in the world’s top economy this year, all the while Europe sinks into recession and Asia posts a meaningful slowdown. This means investors remain focused on establishing the extent to which a firmer US recovery can offset headwinds elsewhere in formulating a reading on global growth trends.

Data compiled by Citigroup suggests US economic data has tended to increasingly outperform expectations over the past three weeks. With Fed stimulus speculation no longer factor after this month’s FOMC outing, similar outcomes this time around are likely to be interpreted directly in terms of their implications for global output.

That means positive results are likely to be supportive for risk appetite and lift the British Pound against established havens like the US Dollar and Japanese Yen. By contrast, weakness can be expected against higher-yielding and sentiment-sensitive counterparts, particularly in the commodity bloc (Australian, Canadian and New Zealand Dollars). Needless to say, softer outcomes are likely to produce the opposite scenario.

Turning to the Eurozone, all eyes are on Spain. The government of Prime Minister Mariano Rajoy will present its 2013 budget to Parliament on Thursday and publish stress test results for the country’s banks on Friday. The former announcement may pave the way for a formal bailout request by the Eurozone’s fourth-largest economy, a colossal undertaking in its own right that will be made all the more noteworthy in that it activate the ECB’s new bond-buying scheme. The latter will be used to gauge whether the €100 billion EU aid package to rescue Spanish lenders will prove sufficient.

The British Pound continues to play the role of a regional alternative to the Euro at times of sovereign stress, with a Bloomberg index of the Pound’s average value showing a significant correlation with the Spanish 10-year bond yield (a measure of funding stress). That means another flare up of sovereign risk jitters triggered by Spanish event risk is likely to send Sterling higher against the single currency, and vice versa.

The risk appetite implications of Euro crisis developments are likely to follow the same dynamic as when US data is the catalyst du jour.

Sep 22, 2012 01:29 AM

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OctaFX.Com -Forget Euro and Pound - What About Local Currencies?

German Chancellor Angela Merkel maybe be trying her utmost to keep Greece in the euro, but a high school teacher from Bavaria may have found a better solution and is pitching the idea to Greek politicians.

Economics teacher, Christian Gelleri, started a local currency in 2003 with his students in the small town of Prien am Chiemsee, around 50 miles south of Munich. The currency has performed so well that on Wednesday he was invited to travel to the Greek region of Macedonia to show local politicians how it could keep them from leaving the euro.

"We see complementary local currencies as an answer to balance differences between regions within a currency zone," he told CNBC.com. "We have very big differences in the euro zone when you compare a region like Munich with Thessaloniki [in Greece]."

His idea doesn't stop at Greece and he believes it could prevent the euro zone break up in the long run.

The idea is called "express money" that would be issued by governments. It would have fast circulation with a 2 percent levy for hoarding notes with a 10 percent charge for conversion into euros. A supporting document co-written by Gelleri reminds readers that doubling monetary velocity, doubles gross national product.

He recommends a complementary currency on a national level in Greece and even if they did break from the euro, he believes that local currencies could be used alongside the drachma to strengthen poorer areas.

And Gelleri has plenty of experience, the currency he created - the Chiemgauer - will celebrate its 10-year jubilee next year.

"With a turnover of 6 million euros last year and a growth rate of 20 percent we see a continuous and very positive development," he said.

The amount of local currencies across Europe has now reached 104, all of which are listed on complementarycurrency.org. This week Bristol, a city in southwest England, launched the latest of these - the Bristol Pound.

The project is backed by the Bristol Pound Community Interest Company who initially set the exchange rate which is simply one-to-one with the pound sterling.

A secure printing firm creates the notes, seven main outlets then issues them and 350 independently owned businesses in the region will be accepting them in the coming weeks. They hope 1000 businesses will sign up to the scheme by the end of the first year.

A business consultant who lives in the area, Ross Parker, isn't so keen on the idea saying it won't change people's spending habits or the amount of money they have.

"The Bristol Pound is linked to the U.K. pound, and neither the Bristol Pound, nor other local currencies would survive without such a link," he told CNBC.com. "There is no reason why people would trust their local council to stand behind any currency if they can't trust their central bank."

Dr Gill Seyfang, an academic from the University of East Anglia in the U.K., who lectures on sustainable consumption, has a more positive outlook for the Bristol Pound.

She sees it as being more professionally-organized, more useful and better marketed than previous attempts. There's a clear reason why these local currencies are appearing according to Seyfang.

"As people find that more of their needs are simply not met by national (and international) currencies, then naturally people look to new, innovative financial solutions," she told

"These initiatives always spring up in times of economic recession," she said, citing the "stamp scrip" that begun in the American state of Iowa during the 1930s Great Depression.

Sep 24, 2012 10:27 AM

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OctaFX.Com -Bailout fund boost to 2 trillion euros not feasible: German spokesman

BERLIN (Reuters) - Germany's finance ministry said on Monday that talk of the euro zone's permanent bailout fund being leveraged to 2 trillion euros via private sector involvement was not realistic, adding that any discussion of precise figures was "purely abstract".

Ministry spokesman Martin Kotthaus said there were talks going on in Brussels about leveraging the capacity of the European Stability Mechanism (ESM) in the same way as its predecessor, the European Financial Stability Fund (EFSF).

But, asked about a report in Spiegel magazine that the ESM's capacity could be leveraged to 2 trillion euros, he said this was "illusory".

"It is not feasible to talk about figures at present," he told reporters. "It is purely abstract."

Kotthaus said Germany's government and parliament backed the idea of boosting ESM capacity via "private capital participation in loans or other instruments for states which require them" just as they had supported such instruments for the EFSF.

The ESM is expected to come into force on October 8 with a firepower of 500 billion euros.

Kotthaus said he had no information about a separate Spiegel report on a 20 billion euro hole in Greece's state budget.

Sep 24, 2012 10:41 AM

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