Is the Eurozone sovereign debt crisis going to resurface again soon?

Home » Foreign Currency News » Is the Eurozone sovereign debt crisis going to resurface again soon?

Italian debt auctions were tepid at best yesterday with any demand being put down to central bank activity, raising substantial concerns across financial markets and amongst the ratings agencies that the periphery governments in Southern Europe are yet to get on top of their sovereign debt crisis. It seems the strategy at the moment is to do as little as necessary to buy themselves some more time.

The data from the Eurozone and the US yesterday demonstrated that it is not just the UK that is low on confidence. Eurozone consumer confidence fell by five points to -16.5 in August, economic confidence dropped five points to 98.3 and industrial confidence was down by three to -2.9. In the US, the conference board's index of US consumer confidence slumped from 59.2 to 44.5, a drop of 25%. By comparison, the UK's index of consumer confidence fall from -30 to -31 looked almost benign.

In Britain mortgage approvals numbered 49,230 in July, 230 more than investors were expecting and the highest level since May last year. Unfortunately, the upbeat data had no positive impact on Sterling, probably because mortgage lending it still less than half it was before the financial crisis.

Sterling did manage to hold its position against the Euro however, both currencies were down by half a cent or more against the Australian Dollar, New Zealand Dollar and Canadian Dollar.

Today focus turns firmly toward the US labour market today with the release of August figures on ADP private sector payrolls and Challenger job cuts, ahead of Friday's official employment report. ADP private payrolls are expected to be up by 100,000 in August according to forecasts having slowed from an average gain of 200,000 a month in the first quarter of 2011.

In the Eurozone, the data calendar is dominated by the German unemployment figures and the "flash" Eurozone CPI for August, which is expected to hold at 2.5%.