A very good morning in European markets

Börse Frankfurt

Börse Frankfurt

Despite the fact that the American Congress endorsed the agreement needed for the US to avoid the “fiscal cliff”, the dollar didn’t seem to recover and continued on its mild downward tendency with the euro, a path that started three weeks ago, with the finalisation of Greek package.

In the US the agreement negotiated between the Administration and the Republicans of the Senate and the House of Representatives foresees higher taxation for households with annual incomes above $450,000, but obliges President Obama to come up with a package of expenditure cuts in two months.

This last arrangement may constitute another friction point for the American economy, given that another lengthy negotiation between the President and the Republicans may not be concluded before the end of February, a prospect which may cripple the ability of the Administration to execute the Budget.

A similar case in 2011 led to the deterioration of the creditworthiness of the US economy. Coming back to Europe the approval of a €52.5 billion package in favour of Athens and the enforcement as from 1 January 2013 of the “fiscal compact”, to make sure that there won’t be another sovereign credit in the future, seem to have covered the holes in the Eurozone edifice, at least for the foreseeable future.

On top of that, the agreement for a common banking supervision space in Eurozone, powered by European Central Bank, have restored confidence in the single European money and the major banks have overcome their fears.That’s why on the first day of the New Year, when the markets opened the euro gained a lot of grounds vis-à-vis the American dollar.

Within hours the parity of the two monies passed from 1.320 to 1.328 and almost touched the benchmark level of 1.33. At the same time all the European stock markets had a very good opening the first day of the year, with large gains of almost 2% before noon.

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: