Ireland Goes Cold Turkey

The
Irish 4-year austerity plan was released and contained few surprises. PM Brian
Cowen said that a bailout of €85bn has been discussed with EU and IMF
officials, though not yet agreed. While a successful conclusion of negotiations
on an aid package could help stem some of the recent euro downslide, it is
difficult to see a more substantial euro recovery ahead of the budget vote.

The
dollar moved lower yesterday against its main rivals, after the release of a
mixed string of economic figures, with employment and consumer spending giving
reasons for hope while durable goods orders showed downbeat readings. Personal
Income and spending rose in October, while initial jobless claims declined. On
the other hand, US durable goods orders dropped 3.3% against market
expectations for a 1.1% increase. However, the dollar firmed during the Asian
session overnight as speculation about further China tightening continued, and the
recent confrontation on the Korean peninsula produced more headlines.

Meanwhile,
the economic data in Europe showed business confidence in Germany rose to
a record high in November, with the IFO survey advancing to 109.3 from a revised
107.7 in the previous month. The gauge for future expectations increased to
106.3 from 105.2 in October to mark the highest reading since the series began
in 1991.

In
the UK,
Bank of England Monetary Policy Committee Member Andrew Sentance has said he
fears that monetary discipline and confidence in the inflation target risks
being eroded if emergency monetary policy settings remain intact for too long
and reiterated his view that the BOE should begin to raise the Central Bank
Rate. The calendar of eco data is empty today with US
markets closed for the Thanksgiving Day holiday though the markets in the UK will be
watching closely for the Treasury Committee Hearing as Bank of England MPC
members testify on the Quarterly Inflation Report.

Report
by Tim Lewis