Sentiment Holds Firm
A stronger sequential manufacturing PMI print out of China has managed steady markets for the time being, especially in the wake of Moody’s downgrade of the Eurozone’s rescue funds from AAA to Aa1. Moody’s in particular voiced some doubts over the ability of Eurozone member states to meet their contributions, with France as a key ‘constraint’. Various Eurozone leaders and Finance Ministers have refuted Moody’s claims, and Austrian Finance Minister Fekter stressed that the downgrade was not a reason for the ESM to be ‘topped up’ beyond its current capital contributions. ‘More Europe’ and fiscal integration was always going to strain ratings, given the necessary guarantees, but it does not appear funding costs will rise to destabilising levels in the near future. Elsewhere, there were the usual comments from Japanese authorities but USDJPY failed to react assertively. Ahead today, PMI manufacturing is out in Germany, along with manufacturing ISM in the US. Overnight EURUSD traded 1.2973-1.3046 and USDJPY 82.27-82.50.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank