Euro falls to fresh 2-year lows as German court delays ESM ratification

Europe’s economic plight suffered another blow overnight after the German Constitutional court further delayed the ratification of Europe’s permanent bailout fund, the European Stability Mechanism. In what could be lengthy delays, opponents of the ESM are attempting to foil the permanent rescue fund, while ironically European leaders are busily putting the fund to work in an effort to shore-up confidence in the region.

With a great deal riding on the successful implementation of the permanent rescue fund, news of delays undermines recent initiatives which rely on the fund’s EUR500 billion capacity, including the latest plan to recapitalize Spanish banks. Meanwhile, European finance ministers have agreed to provide an initial instalment of EUR30billion to recapitalise Spain’s ailing banking sector with the first disbursement of funds to come from regions temporary bailout fund. The total amount of provisions set aside will remain at EUR100 billion, but a final figure will not be known until July 20. Ministers also agreed to allow Spain additional time to meet the strict budget deficit targets to 2.8 percent of GDP by the end of 2014 and placed lower deficit targets on 2012/13.

True to form, European dramas dominated proceedings in the U.S with the DOW and S&P finishing down 0.65 and 0.81 percent respectively. It was another session of milestones for currencies with the Euro falling to fresh 2-year lows against the greenback and euro-era lows against the Australian dollar. After falling on the back of Chinese trade data yesterday, the Aussie dollar regained ground in early European trade before falling to lows of 101.59 with both Spain’s bailout and the ESM delays the key catalysts. At the time of writing the Australian dollar is buying 101.85 US cents with support eyed around the 101.5 US cent region. Short positioning was increased after yesterday’s breach of 102.4 US cents suggesting the bears remain in control ahead of key data from China later this week. Local data due for release this morning is Westpac Consumer Confidence at 1030am AEST and Home loan activity at 11.30.

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1 Response

  1. Honey says:

    My first thought was “This is initnsay’ But no, it is anything but insane. I read Draghi’s words in the SD post this AM. My first thought was that his wording was tantamount to a declaration of war Here is the document that declares economic war on the entire EU community. ESM to Europe. We will take your money (and sovereignty) without any thought to the legality of our demands. How Hitlerian. Mussolini would be grinning ear to ear. When an unelected group makes a demand for payments of sovereign resources without any recourse to protest these demands, without any buffer of time, with no legal remedy to stop or even delay these demands, demands that have no upper limit, then the ESM has declared war on Europe. No different that Hilter taking Poland in 1939. No different than the unconditional demands of surrender signed on the deck of the USS Missouri after WWII.The Italians and Greeks have been discussing this in their newspapers and posts. The ESM is making absolute demands for soveriegn nations to give up their rights, liberty and freedoms to an absolutely autocratic power elite.All wars are economic in nature.And by the way, These ESM demands will come to our shores soon enough. Worded differenly but just as much an assault on our sovereignty nonetheless. Ben will pucker up tighter than a pederast in supermax. But he will give it up soon enough.

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