New Tensions

The Ryder Cup had been a thriller for Europe but despite its victory, its single currency started off the week with a number of concerns over Spain bank’s capital deficit of 59 billion Euros. The three envoys from the troika have returned to Athens last Sunday and they want to finally wrap up the negotiations over a package of austerity measures. Additionally, thousands of demonstrators in Spain and France marched against these, reinforcing the already heightened economic and social tensions in Europe. In Asia, both China and Australia shared a weak PMI data therefore adding to the cautious mood.

The euro plunged down to 1.2804 overnight, just below the 200d moving average which has been tested on several occasions over the past few days.  AUD also dropped below the 200d moving average overnight to 1.0325 and GBP fell neared 1.61. Meanwhile, JPY and USD were both dominating as have always been the case since the Fed announced its intention to implement another quantitative easing back in mid-September. The US has also released the Construction Spending figure which revealed a downturn of 0.6% which is much worse than a rise of the same scale that was forecasted. Nonetheless, it has proved to be a better number than the one reported in the previous month (-0.4% instead of -0.9).