We'll see if there is more to this move in favor of riskier assets considering we had heavy risk aversion throughout the first half of the week, but we did have some positive data coming out from the US which seems to have stabilized markets. Yesterday we reported on the positive jobless claims data - the best in three years - as well as leading indicators on the manufacturing sector that beat expectations. market is likely relieved that one of the major economies is showing some positive signs and that the economy there is seeing some healing or pick up in momentum. Again, we'll have to see how long this move last sorted simply a pullback to a more general risk aversion theme.
Italy's Lower House Passes Reforms, European Periphery Yields Ease
In a positive development for the euro zone sovereign debt crisis the lower house of Italy's Parliament passed the new Prime Minister Monti's austerity plan. The package was approved by a vote of 495 in favor and 88 against.
From Bloomberg: Monti has said the measures, which include an overhaul of the pension system, the reinstatement of a property tax on primary residences and measures to boost growth and fight tax evasion, will help protect Italy from the spread of the debt crisis and bring down record borrowing costs.
Looking at the Italian versus the German 10 year yield, or spread, the see a significant decrease in today session again a positive.
Similarly we see a strong narrowing in the Spanish and German spread.
EUR Breaks 55-EMA in 1H
With general positive sentiment in Europe we see the euro rallying in today session pushing above the 1.3050 area. the one-hour timeframe that pushed us above the 55 EMA and we currently test the 1.3090 area which is the 100 EMA. is also it close to a 50% retracement of the downswing we saw from Tuesday's high to Wednesday's low.