The Eurozone meeting in Brussels during last two days created some surprises. The officials signed off on funds to underwrite the EUR 206 billion debt swap of the Greek bonds held by private investors. This is positive. However, on the negative note, Eurozone members have delayed approval of more than half of the EUR 130 billion bailout proper. They determined that Athens has yet to meet all the terms set as the price of a second rescue. More assurances are sought from Greek government that is will stay on the reform course even after new elections in April. This means that Greece is not out of the woods just yet, with additional disappointments still possible.
Today Spain delivered another surprise. The country announced that the budget deficit for 2012 would likely be as high as 5.8% of the gross domestic product, exceeding the target of 4.4% agreed with the EU. In 2013, however, it should drop to 3%. The larger than expected deficit is a big deal, because Spain could be next in line for bailout or some other sort of financial assistance. To make matters worse, Spain continued to lose jobs at a fast pace in February, suggesting the local economy continued to contract in the first quarter. According to data released by the country’s Labour Ministry, February jobless claims rose by 112,269, or 2.44% from January, likely pushing the country’s 23.3% unemployment rate even higher. Total jobless claims stood at just over 4.7 million, the worst reading in at least 15 years. In response, the yield on Spanish 10-year bonds increased to 4.92%, higher rates on Italian securities. There were some negative comments from the member states and the Euro kept falling most of the day.
Couple of days ago I discussed a buy in the AUD-NZD pair. The idea was to buy it on a move above the latest minor high, with the order at 1.2865. My objective was 65 pips. The price indeed went in the right direction, reaching my target. Well, almost reaching it. On this platform, it only climbed to 1.5929 on the bid, one lousy pip short of my target, and started to fall. I closed the trade a little later for 39 pips gain. Better to take profits than to wait until Monday. Have a great weekend!
Mike K.
