EUR – Austerity And Risk Sentiment

The EUR traded in a stable manner on Thursday and turned in some gains versus the USD. The ECB managed to get through their press conference with President Trichet at the helm and keeping calm waters. That does not mean all the news regarding the Sovereign Debt crisis has gone away. The facts remain that several E.U. nations face difficult financial paths. It is important to strip away the noise from the heart of the real issues. While rumors persist about the trouble several nations will have regarding their debt obligations, one of the pure concerns for the E.U. will be how the bills will be paid if governments and banks begin to actually face liquidity problems. Austerity measures are starting to be instituted, but the hardest task may be enforcing these spending cuts and stopping the temptation to look the other way once in a while in order to keep populations content. Meaning that severe austerity measures may put a crimp into the possibilities of achieving growth in some cases as spending is eliminated. There will be inflation data from Germany and France today, but the crux of the matter remains risk sentiment surrounding the EUR and the search for real value.

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