EU leaders missed the opportunity to deliver markets a positive surprise at the end of the March 24-25 summit. In short, the EU council agreed on the structure of the ESM that will be active in 2013, but details for the expanded EFSF will not be provided until June. No changes to the Irish bailout package were announced. Leaders did, however, sign up for the Euro Plus Pact (initially called the Competitiveness Pact), a more stringent incarnation of the of the 1997 Stability and Growth Pact which, amongst other things, set countries’ debt limits to 60% of GDP. Tomorrow, German will release CPI (500 GMT)
The yen fell against the dollar and the euro on concerns about radioactive water leakage at Fukushima Dia-ichi nuclear power plant. USD/JPY rose to 81.7, the highest level since March 18. In addition, JGB yields rose for two consecutive days on expectations that the growing rebuilding cost will boost the economy and worsen the Japanese fiscal situation. The Japanese government said last week the quake may have caused as much as 25 trillion yen of damage. Tomorrow the markets will be watching the Nomura PMI at (400 GMT).
In the US, The National Association of Realtors said its index of pending home sales rose 2.1% to 90.8 in February, the first increase in three months. The rise could spill over into existing home sales in March, if mortgage rates continue to remain relatively low. The index still stands 8.2% below the year-ago level of 98.9, when a now-expired federal tax credit boosted sales.
Consumer spending rose by 0.7% in February, more than in January, according to the Commerce Department. The increase was the largest since October and the eighth straight. Spending is a crucial part of the economy, making up 70% of demand in gross domestic product. The pickup in spending came as personal income rose by 0.3%. Tomorrow’s Case Shiller Housing Price Index will be the headline data point.
Written by ForexMansion.com