Ireland goes cold turkey

The Irish 4-year austerity plan was released and contained few surprises. PM Brian Cowen said that a bailout of EUR85bn 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.