Deficit reduction goals tailored to individual circumstances in bid to reduce sovereign debt

Despite the differences between the US and European approaches to reducing budget deficits, austerity measures and fiscal stimulus, we got the usual bland communiqué about striving to maintain existing stimulus plans while outlining the need to set out properly phased plans to reduce sovereign debt by at least half for advanced economies by 2013.

There was one key difference though and that was that individual countries would have deficit reduction goals, tailored to their individual circumstances.

Canadian host and Prime Minister, Stephen Harper, said that despite cuts in spending, short term economic stimulus measures were still needed but that the problem, in the words of EU Commissioner, is that Europe has no more flexibility to continue spending through increased stimulus and as such is already starting cut spending.

Last week's unexpected downward revision of US GDP to 2.7% has continued to unsettle investor's nerves regarding the fragile recovery, and financial markets will be looking for this weeks data to give some indication that we are not heading into a double-dip recession.

Also from the US on Friday was the University of Michigan consumer confidence was revised up by 0.5 points to 76.0 in the final June reading, reaching the highest level since January 2008.

On the data front the week for foreign currency news, we have the final revision to UK GDP from the first quarter of 2010 but it is the US nonfarm payrolls release on Friday that will be the key market-mover.

Ahead of this the personal income and spending data today, consumer confidence survey on Tuesday and the ADP private sector payrolls report on Wednesday will shape expectations of the labour market's capacity to sustain consumer spending.