John Snow: euro’s rescue needs resolute measures
John Snow, the former U.S. Treasury Secretary, believes that the single currency may end its life if the euro zone nations don’t unite all their policies.
According to him, fiscal consolidation is certainly the most important, but the merging of labor and capital markets might be necessary as well.
Snow believes that the main thing to worry about is that what’s happening with the government bonds as the debts of a state are too big to bailout and the number of countries to help is too big, there will be a moment when there will be no one to help indebted nations.
The International Monetary Fund won’t be very useful as it also depends on donations.
The economists also spoke about the danger of hyperinflation as the governments can start printing money trying to save themselves.
Bank of Tokyo Mitsubishi UFJ: pound will drop to $1.38
Analysts at Bank of Tokyo Mitsubishi UFJ Ltd. claim that even though British currency has already significantly depreciated they expect pound to survive a further decline to $1.38.
As a result, they recommend selling sterling versus the greenback.
Pimco: euro zone's growth pace will be below the avarsge
Economists at Pacific Investment Management Co., managing more than $1 trillion in assets, claim that despite the fact that world’s markets survive a confident rebound the European economic growth will stay below the average level. According to them, the current structural factors are more powerful than the cyclical ones.
The specialists say that the extension of the euro zone’s crisis all over the world is quite possible as the markets worry that the countries’ debts are too high to get over this situation.
Bank of America Merrill Lynch estimates that European countries will need about 2 trillion euro in order to repay their obligation during the next 3 years.
Pimco predicts that the problems will last for the long term. The past year demonstrated the cyclical advance of the global markets but that didn’t actually help to raise employment and investments.
Bank of Nova Scotia: no factors for euro's growth
The single currency slumped close to its minimum since March 2009 losing 1.2% this week trading versus US dollar.
It was affected as the markets are worrying that the indebted euro area’s countries will act too slow to fight the budget deficits efficiently.
Strategist at Bank of Nova Scotia in Toronto claim that there are no factors that could make investors be bullish on euro. Even though the tension eased when there was agreement on the bailout the markets still don’t make out how the fiscal tightening measures will be brought to life.
Strategists at UBS AG in London agree that the market is absolutely negative on euro.
US initial jobless claims slightly declined
According to the data for the week before May 8, the number of initial jobless claims declined by 4,000 to 444,000. Such improvement is regarded as rather week because the revised figures of the previous week turned out to be up by the same amount.
However, the 4-week average got to the lowest level since the end of March decreasing by 9,000 to 450,500.
As for continuing claims for the week before May 1, they became a bit higher to 4.627 million while the four-week average climbing to 4.640 million.
Such results became better but not better enough to expect sizable growth of payrolls in May.
USD/CAD: the pair rebounded to 1.0180
US dollar managed to compensate the losses it experienced versus loonie this week and began recovering. At today’s European session the pair hit the week minimum at 1.0107.
The pair USD/CAD was able to add 80 pips and get above 1.0180. The greenback was supported by the decline in oil price and renewed risk aversion.
If the pair goes up, resistance levels will be at 1.0215 (May 12 maximum) and 1.0270. If the rate declines, support levels may be found at 1.0145 and 1.0105/00 (session’s minimum).
