21st May: What’s news?

Foreign Exchange

Euro Rises for Third Day as EU Officials May Discuss Ways to Stem Crisis The euro rose for a third day against the dollar on speculation European Union officials meeting today will discuss more measures to counter the region’s spreading debt crisis.

Brazil’s Real Posts Longest Losing Streak in 19 Months on Europe Crisis Brazil’s real fell for a sixth day, the longest losing streak in 19 months, on speculation tumbling commodity prices will lower the value of exports and as Europe’s debt crisis prompted investors to shun higher-yielding, emerging-market assets.

Canada’s Dollar Drops to Two-Week Low as Europe’s Debt Turmoil Deters Risk Canada’s dollar fell to the lowest level in two weeks after equities and commodities tumbled on Europe’s sovereign debt crisis and a U.S. jobs report.

Commodity-linked standards suffer from risk aversion The euro benefited as Wednesday’s short covering rally returned for a second day.

Analysis:

Risk of G3 Currency Intervention Becomes `Elevated,’ Morgan Stanley Says There is an “elevated threat” the central banks of Europe, the U.S. and Japan will intervene in currency markets though the threshold has not yet been reached, according to Morgan Stanley.

Norway Krone’s Plunge Is Overdone, Time to Start Buying, Danske Bank Says Investors should buy the krone against the euro as the currency’s 4.2 percent drop this week is overdone taking into consideration the nation’s economic fundamentals, Danske Bank A/S wrote today.

Dollar’s Rally Above Moving Averages Bearish for Risk: Technical Analysis The dollar’s rally above its 200-day moving averages against the Canadian dollar, Mexican peso and South Korean won signals market volatility is damping risk appetite, according to strategists.

Renminbi truce creaks as other groans arise China says eurozone problems alter the debate while companies complain of protectionist tactics

The Australian dollar is on a boomerang trajectory The Australian dollar appears to be in a weak spot at the moment – and it is hard to see where a floor for the currency might emerge, writes Neil Mellor at Bank of New York Mellon.

U.S. Dollar a Haven, but for How Long? The United States dollar may be a good investment now, but it can’t remain that way long if America continues its bad borrowing habits.

Aussie loses to fresh yen for safe havens Amid fresh bouts of currency volatility and speculation about Swiss intervention in the euro on Thursday, the “safe haven” aura seems to be shifting back towards the yen.

Americas

On the US:

Dow Drops 3.6%, Hits Correction Territory Worries about Europe’s debt crisis sent stocks plunging, leaving major indexes off more than 10% from recent highs.

U.S. Senate Approves Wall Street Financial Overhaul Bill After 59-39 Vote The U.S. Senate approved a sweeping overhaul of Wall Street regulation that would create a consumer protection agency, strengthen oversight of derivative trading and ban proprietary trading at banks.

U.S., Europe Equity Funds Lose $12 Billion in Week Amid Crisis, EPFR Says Investors withdrew some $12 billion from U.S. and European equity funds in the week to May 19 on concern Europe’s sovereign-debt crisis will slow global growth, EPFR Global said in an e-mail.

Leading Indicators Decline in Sign U.S. Recovery May Cool in Second Half The index of U.S. leading economic indicators unexpectedly declined in April, a sign the economic expansion may cool in the second half of the year.

Fed Governor Says U.S. Could Feel Europe’s Pain Daniel K. Tarullo, a Federal Reserve governor, laid out for a House panel how Europe’s debt problems could cross the Atlantic.

FDIC: ‘Problem’ Banks at 775 The FDIC said the U.S. banking industry continued to face challenges in the first three months of 2010, with more borrowers falling behind on loans, lending continuing to decline and more banks expected to fail.

VIX Approaches Pre-2008 Record Highs Prior to 2008, the VIX had only managed to nudge its way over 45 on three instances

On LatAm:

Trichet’s Pain Is Meirelles’s Gain as Bets Pared on Brazil Rate Increase The debt crisis confounding European Central Bank President Jean-Claude Trichet is helping his Brazilian counterpart Henrique Meirelles tame inflation expectations in Latin America’s biggest economy.

Mexico’s GDP Expands 4.3% Even as Calderon’s Drug War Drags on Economy Mexico’s economy expanded for the first time on an annual basis in more than a year even as escalating violence related to drug trafficking dents growth.

Bovespa Tumbles for Sixth Day on Petrobras Delay, Europe Deficit Crisis Brazil’s Bovespa stock index and the real fell for a sixth day, their longest losing streaks since October 2008, as concern mounted that Europe’s debt crisis will slow the global recovery.

OpEd: Lost Decade Looming? America definitely isn’t Greece, but it is looking more and more like Japan. Inadequate recovery, not deficits, is the big problem.

Asia

Asian Stocks Follow Wall Street Lower Asian stock markets slid on Friday as worries about the euro prompted investors to cut risky positions.

Asia’s Export-Led Recovery Exposes Risk of Europe Slowdown, Currency Gains Asia’s growth is accelerating as companies ship more cars, computers and commodities overseas, highlighting the role of exports in the region’s recovery and the risk of a slowdown should Europe’s debt crisis worsen.

Thailand’s Economy Probably Expanded Most Since 1995 Before Crisis Flared Thailand’s economy probably expanded at the fastest pace in 14 years last quarter, a recovery now endangered by the nation’s worst political violence in 18 years that’s shuttered sections of Bangkok and decimated tourism.

Taiwan Outpaces China as Growth Reaches Fastest Pace in More Than 30 Years Taiwan’s economy grew at the fastest pace in more than 30 years last quarter on surging sales of computer chips and display panels to China, as it heals ideological wounds with its neighbor in favor of trade ties.

Dubai World Reaches Deal to Restructure Its Debt After help from Abu Dhabi and talks with 90 lenders, loans to the emirate will be extended to give its sovereign conglomerate, Dubai World, time to cut costs and sell assets.

Exports up as Japan begins ‘tentative’ recovery from deflation IMF report urges world’s second-biggest economy to address huge debt from next year to aid manufacturing industry

OpEd: Grey areas in Chinese loans give pause for thought This spring, a curious type of underground banking is proliferating in parts of China.

Europe

German Business Confidence May Rise to Two-Year High as Euro Buoys Exports German business confidence probably rose to a two-year high in May as the weaker euro and faster global growth boosted exports.

Sweden Emerges as `Safe Harbor’ From Debt Woes Plaguing Southern Europe When the Baltic countries’ economies collapsed, investors fled Sweden because of its banks’ investments there. Today, they’re flocking to the Nordic country as a refuge from debt-ridden southern Europe.

Denmark’s World-Beating Bonds Top Germany’s Bunds as Budget Caps Supply Denmark’s government bonds are proving a better haven than Treasuries or German bunds and its stocks are leading the developed world, as Europe’s debt crisis drives investors to nations with low relative deficits.

Spain Approves First Public Wage Cuts Since 1970s to Cut Budget Deficit Spain approved the first public wage cuts since returning to democracy in 1978 and cut its economic growth forecast for next year as the government tries to tame the euro region’s third-largest budget deficit.

Geithner to Visit England, Germany Next Week to Discuss European Crisis Treasury Secretary Timothy F. Geithner will visit Germany and the U.K. next week to discuss the European debt crisis, the Treasury Department said today in a statement in Washington.

No One Says Trichet Can Succeed Himself When Euro Enthusiasts Get Wistful The European Central Bank’s ability to tackle the euro area’s sovereign-debt crisis won’t end with the departure next year of President Jean-Claude Trichet, the continent’s most experienced monetary policy maker.

Trichet Faces Growing Criticism in Europe Debt Crisis As the European Central Bank has struggled to contain Europe’s debt crisis, Mr. Trichet has given ground on some principles and opened himself to criticism.

Greek debt crisis faces double blow of brain drain and early retirement Efforts to overhaul Greek economy undermined by deluge of requests to retire early, while young graduates rush to emigrate.

German action on euro crisis could trigger EU referendum in Britain Demand for new single currency rules raises possibility of Lisbon Treaty being renegotiated.

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