Forex Forum @ ForexAbode

[Himanshu]

Oct 3rd: Greece government has approved a USD 8.8 billion (Euro 6.6 Billion) in austerity (policy of deficit-cutting, lower spending, and reduction of benefits and public services).

This step was to show the ablility reduce the budget deficit to secure a pending aid payment and a second rescue package.

Greece budget deficit of 8.5% of GDP is estimated to be reduced to 6.8% (Euro 14.7 B) by these measures.

Greece economy is forecast to shrink 5.5% in 2011 which is more than the 3.8% June forecast by the EU and IMF.

The plans tocut this deficit involves governmental job cutting, reduced pays for identified workers,new property tax, cutting down the pensions and wages of state workers.

Well, it is a short-term and quick solution, which may have longer term negative effects also. Grass is not yet green.

[Himanshu]

It was expected because what else could be expected with job cuts, pension cuts, property tax being increased to cut the spendings and hence budget deficit. Short term solutions which can only backfire in longer term.

The largest public sector union of Greece (ADEDY) called the first 24 hour strike. Athens International Airport will be closed for the day and not only that but the strike will be applicable to schools, hospitals etc as ADEDY represents over 400,000 workers out of 750,000 state workers of Greece.

GSEE (General Confederation of Labor) which is Grrece's largest private sector union representing workers of companies and utilities which are run by the state also planned a a general strike for October 19.

Greece's debt is 161.8% of the GDP.

[Himanshu]

Moody cuts the credit rating of Italy from Aa2 to A2 because of the negative outlook of the economy. This was the first cut by Moody's Investor Service for Italy in close to 2 decades.

[Himanshu]

Moody’s Investors Service's statement mentions 2 things:

1) Warning that euro-area nations rated below the top Aaa level may see further cuts in the ranking because of debt crisis (Negative).

2) But “There are no immediate pressures that could cause downgrades for Aaa-rated countries" (Positive).

[Kevin]

unexpected drop in the german factory orders. Trichet's speech today at gmt 12.30. should cause some volatility in otherwise dead eur/usd

[Keith]

Spain's credit rating was cut two levels rom AA+ to AA- by Fitch Ratings on the euro crisis and slower Spanish growth as risks to the Spains’s debt outlook.

Fitch cut its rating to AA- from AA+,

[Himanshu]

A tough day indeed. The news (well, not News but the dialogues) from Europe building hope including some of the recent comments from Trichet that economists are underestimating Euro and Europe economy and then developments and dialogs from US including the recent quite positive nonfarm payroll report as well as comments like "US economy will skirt the recession and it does not seem to go into double dip recession".

Well, a day of conflicting sentiments even though the situations remain same. But the market moves on sentiments, especially the short-term moves. And here we are and this day is one of those days. Relax and wait is the mantra for such days and we will try to be away from the market to see it getting back to the real pace and real base.

[Himanshu]

USD/CHF breaks the near-term trend line support first time after over 4 weeks. More downward move should take place. Please check the daily chart:

[Himanshu]

... but till where? Here?

[Nicholas]

[Bloomberg] Slovak lawmakers failed to approve an overhaul of Europe’s bailout fund, toppling the government and leaving the euro area’s second-poorest member with the need to repeat the vote to pass the mechanism.

Smer, the largest opposition party, which didn’t back the legislation today, will support the changes in a second vote, ensuring it will pass, party leader Robert Fico told reporters in the capital Bratislava. While no date has been set for a new vote, Finance Minister Ivan Miklos said the revamped European Financial Stability Facility will likely be passed this week.