Market Tension Eases

Risk appetite has returned to the
markets after a shaky week.  Equities moved higher in both
Europe and the US following comforting comments from Central Bank
members at the ECB and the FED.  Mario Draghi along with other
ECB members stated that an “exit” from current policy is
distant.  In addition comments from the US came someway to
easing fears of a near term tapering of stimulus and in addition
China’s interbank rates eased reducing tension.  Next week we
have the ECB interest rate meeting and the US non-farm payroll data
which will help to forge a clearer direction for the markets.

At 1:30 this morning EU finance
ministers thrashed out a deal in relation to failing banks making
it clear that “shareholders and creditors are liable first and
foremost” and this move pushes the Euro area one step closer
towards a euro banking union.  The Euro is under a little
pressure overall in the markets with the sentiment that the ECB are
more likely to ease whilst the US FED are moving towards scaling
back.  This has led to EUR/USD moving lower of the last couple
of weeks.

Yesterday US GDP disappointed the
markets at 1.8% and well below the expectations of 2.4%.  This
led to a rally in equities after Fed comments and the weak number
suggested that there will be more chance of a delay in
tapering.  However the USD has still managed to gain against
the pound and has continued to do so this morning following worse
than expected UK current account data.