The much beleaguered Euro which has enjoyed more of the financial spotlight then any other currency took centre stage again during Asian trading as the European Commission will unveil new proposals aimed at stopping taxpayers’ money being used to bail out banks that have failed. They intend to ensure losses are borne by the bank’s shareholders and its creditors and minimise the costs for the taxpayers. It aims to prevent runs on banks in one country such as Spain, Italy or Greece – taking down the whole system.
The bank resolution plan forms part of the commitments made by the leaders of the G20 group of major economies in September 2009 and would give the EU authorities the power to intervene early. Following on from a decline yesterday, the EUR was up against most major currencies including the USD, where it bounced up 0.42%, trading at 1.2504.
The Group of Seven conference call produced no major announcements though the Japanese Finance Minister Jun Azumi did inform reporters afterwards that the call did not involve discussing ways to handle a Greek exit from the eurozone, which boosted stock prices via relief buying.
Buoyed by the comments made by Azumi, the stock markets had already received a boost when in the U.S., the Institute of Supply Management reported that its non-manufacturing purchasing managers’ index increased to 53.7 last month from 53.5 in April – slightly better than expected. The boost in stocks saw Hong Kong’s Hang Seng Index increase 0.99%, Australia’s S&P/ASX200 gain 0.24%, with Japan’s Nikkei 225 Index climbing 1.08%.
Today looks like being a busy day for traders with the European Central Bank announcing its decision on where benchmark interest rates will stand. Then there is a press conference with ECB head Mario Draghi. Also today, the U.S. will release revised data on nonfarm productivity followed by data on crude oil stockpiles
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