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The euro held steady in Asia as markets remained sanguine

Tuesday, February 7, 2012 12:35 PM GMT

Good Morning,


- China's stocks  dropped the most in eight weeks on concern economic growth is slowing, while the euro fell as Greece sought to secure rescue funds. Australia's dollar rose after the central bank unexpectedly kept interest rates unchanged.

- The euro held steady in Asia as markets remained sanguine that Greece will eventually clinch a rescue package, even as the country's political leaders delayed their decision to accept painful terms by yet another day. Failure to secure the 130 billion euro ($170 billion) rescue would risk pushing Athens into a chaotic debt default and destabilize the   entire euro zone, an outcome deemed too extreme to contemplate.

- Greek FinMIn Venizelos said negotiation with Troika are tough. Says great pressure is being brought to bear on the Greek people.

- Merkel and Sarkozy called on Greece to impose better reforms.

- IMF Blanchard said the haircut on Greek private sector debt is huge.

- European officials are insisting any new Greek bail-out program specifically earmark funds to pay off remaining holders of Greek debt, giving lenders the freedom to withhold aid to Athens without risking a messy default that could reignite panic in financial markets. Under a new Franco-German plan that senior European officials said is likely to be included in a new Greek rescue, eurozone officials would create an escrow account to accept new bail-out funding instead of paying it all directly to Athens as in the past. The new fund would then ensure bondholders are paid off, while additional cash to run the Greek government could still be withheld if Athens did not live up to tough new reform demands. A senior French official said the plan, which has backing from the European Commission in Brussels as well as several other eurozone countries, was a way of "removing the Damocles sword of default" while keeping pressure on Athens to reform. The idea of prioritising debt payments was included in a controversial German proposal circulated to eurozone finance ministry officials last month, which also called for a "budget commissioner" with veto authority over Greek spending decisions.

- Australia's central bank surprised financial markets by keeping interest rates steady at 4.25 percent on Tuesday, though it did leave the door open to an easing if the economy weakened down the track. The Australian dollar jumped a cent to a six-month peak of $1.0812 after the Reserve Bank of Australia (RBA) confounded market expectations of a cut to 4.0 percent.

- Australia's Prime Minister Julia Gillard said that elections will be called in 2013; said that the government is still committed to bring a budget surplus by 2013; said that the government will support job creations.

- NZ private wage excluding overtime increased by 0.7% qq in Q4 from 0.5% qq in Q3

- NZ's Treasury said that the economic outlook in NZ has worsened due to the Eurozone turmoil; said that Europe is the main risk to NZ's recovery; said the economy could have expanded by 0.6% q/q in Q4.

- Japanese Finance Minister Jun Azumi said on Tuesday he would not rule out any measures against speculative currency moves. Policymakers in Japan are concerned that the JPY persistent strength could further weaken exports and   may derail the country's fragile recovery from the damage wrought by last year's earthquake and tsunami. Azumi also said he hoped that debt talks in Greece would be resolved quickly. Greece's political leaders delayed their response to bailout terms from the European Union and International Monetary Fund, raising concerns of a chaotic default

- BoJ Gov Shirakawa said that he recognizes Japan's economy is in a severe state. Continue to do utmost to achieve sustained economic growth with price stability

- Japan's MoF's data showed that after massive JPY selling operations on October 31, Japan and BOJ stepped into the market for four-consecutive days. But the size of that four-day intervention, which wasn't disclosed before, was significantly lower than October's, reaching roughly one trillion.

- UK BRC like for like retail sales tanked -0.3%yy compared with 2.2% yy in November. December total sales increased 2.1%yy following a +4% yy rise.

 

Today's Figures

08.45 FRA Trade balance, imports and exports

09.00 CH SNB FX reserves

09.00 DEN Industrial Prod.

10.00 NOR Manuf Prod.

11.45 CH SNB acting chairman Jordan speaks in Geneva (Swiss Mont.Policy in uncertain times)

11.50 UK BoE Bailey speaks at Int. Fin services Forum

12.00 GER Industrial output

13.10 EZ  EFSF's Rgling speaks

16.00 US  IBD economic optimism

16.00 US  Fed's Bernanke testifies

18.00 GER Chanc Merkel speaks

21.00 US  Consumer credit


    (CET)

Have a good day !

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