Daily Market Close – German Courts and Greece Politics

EUR

Germany’s highest court will issue a ruling this week on bids to halt the country’s participation in the European Stability Mechanism and the fiscal pact. The Federal Constitutional Court will decide whether to suspend the 500 billion-euro ($640 billion) permanent bailout fund on Sept. 12.

“Germany should either lead in developing a growth policy, political union and burden-sharing, accept the cost of leadership, or leave through an amicable arrangement,” Soros told Reuters in an interview.

Merkel and German Finance Minister Wolfgang Schaeuble have expressed their confidence that the ESM will survive the constitutional test. Officials voiced greater concern over the details of the court’s ruling rather than the possibility of an outright rejection of the permanent bailout fund.

Daily Foreign Exchange Volatility September 10th 2012

GREECE

Greece’s Prime Minister, Antonis Samaras, meets with officials from the European Commission, the ECB and the International Monetary Fund today. He failed to obtain an agreement from his coalition partners on the spending cuts required to obtain further aid from the country’s bailout.

Greece’s Democratic Left leader Fotis Kouvelis, one of Samaras’s governing partners, said that poorer Greeks must be protected from more austerity. The three coalition leaders agreed to meet again on Sept. 12, two days before euro-area finance ministers gather in Cyprus to be briefed on progress.

JPY

Japan’s current account surplus narrowed from ¥625.4 billion ($7.99 billion) in July. This was lower by almost 41% compared to a year ago. Revised data also lowered the GDP growth from 1.4% down to 0.7% in the April-June quarter.

GBP

Bank of England Governor Mervyn King said that global central bankers have agreed to start an inquiry into the London interbank offered rate, a benchmark rate at which banks lend to each other. The announcement follows a meeting at the Bank of International Settlements in Basel, Switzerland yesterday when King held discussions with his counterparts from the world’s largest economies about the future of Libor.

CHINA

In China, inbound shipments declined 2.6 percent in August from a year earlier, the customs bureau said in Beijing today. That missed the median estimate of a 3.5 percent gain, according to economists surveyed by Bloomberg. Imports rose 4.7 percent in July from a year earlier.

Industrial production in the world’s second-largest economy increased the least in three years last month, according to a report from the National Bureau of Statistics yesterday. Production increased 8.9 percent, compared with 9.2 percent in July. The median estimate of economists surveyed by Bloomberg had called for a 9 percent gain.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza