Asia FX By Cornelius Luca - Mon 19 Nov 2012 17:07:09 CT (Source: CME/www.lucafxta.com)
The appetite for risk improved significantly on Monday, as the markets were caught overly short by hopes that negotiations between President Barack Obama and congressional leaders to avoid a budget crisis will be successful. These hopes may be over optimistic, but this will be another story to tell. Most European and commodity currencies surged after most of them fell on Friday, while the yen remained weak after diving to a 6 ½-month low. The US stock indexes soared. Gold, oil and silver advanced as well. The short-term outlook for the European and commodity currencies is sideways to slightly bullish. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies. Good luck!
Overnight
US: The NAHB/Wells Fargo Housing Market Index rose to 46 in November from 41 in October.
US: Existing home sales rose 2.1% to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September. The median existing home price rose 0.2% to $178,600 in October and up 11.1% compared to a year ago.
Today's economic calendar
Australia: The Conference Board leading index for September
Australia: The RBA meeting's minutes
Japan: The BoJ interest rate decision
Japan: All Industry Activity Index for September
Asian Stocks Rise Third Day as U.S. Home Sales Advance (Bloomberg)
Asian stocks rose, with the regional benchmark index poised to advance for a third day, as better- than-forecast U.S. home sales boosted optimism in the world’s largest economy. LG Electronics Inc. (066570), a South Korean maker of consumer electronics that gets almost a third of its sales from North America, climbed 2 percent. Samsung Electronics Co., the world’s No. mobile phone maker, gained 1.2 percent in Seoul after a U.S. trade agency agreed to review its patent case versus Apple Inc. BHP Billiton Ltd., the world’s biggest mining company, added 1.1 percent in Sydney as metal prices advanced.
The MSCI Asia Pacific Index (MXAP) gained 0.1 percent to 121.21 as of 9:34 a.m. in Tokyo, with about two shares rising for each that fell. Markets in Hong Kong and China are yet to open. The measure extended its rally for a third day after President Barack Obama started talks with Republicans and Democrats on a U.S. budget agreement. Failure to strike a deal will trigger more than $600 billion in automatic tax increases and spending cuts that may throw the country into a recession. “Confidence is growing that a U.S. budget deal can be reached, as politicians from both parties continue to make some positive comments on working together to come up with a solution,” said Stan Shamu, a market strategist at IG Index, a Melbourne-based provider of trading services for equities, currencies and commodities. “Better-than-expected existing home sales data has also helped to lift sentiment.”
Japanese Stocks Gain on U.S. Housing Data, Stimulus Hopes (Bloomberg)
Japanese stocks rose, with the Topix Index heading for the biggest gain in a four-day period since March 2011, after U.S. home sales rose more than expected and amid speculation a party more supportive of stimulus may take power in next month’s election. Fuji Heavy Industries Ltd., the maker Subaru cars that gets almost half its sales from North America, gained 0.8 percent. Inpex Corp., Japan’s top oil explorer by market value, rose 0.6 percent after crude prices rose to a one-month high. Nikon Corp., a camera maker that gets about a quarter of its revenue from Europe, added 0.9 percent as the yen weakened against the euro after France lost its top credit rating. The Topix gained 0.2 percent to 763.40 as of 9:33 a.m. in Tokyo, with more than two shares advancing for each that fell. The Nikkei 225 Stock Average (NKY) added 0.1 percent to 9,157.48, with volume almost 20 percent above the 30-day average.
“Better-than-expected existing home sales data has helped to lift sentiment,” said Stan Shamu, a market strategist at IG Index, a Melbourne-based provider of trading services for equities, currencies and commodities. Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The S&P 500 gained 2 percent yesterday as sales of previously owned U.S. homes climbed in October and Obama expressed confidence on a budget agreement with Congress. Purchases of existing U.S. houses increased 2.1 percent to a 4.79 million annual rate, exceeding the median forecast of economists surveyed by Bloomberg, figures from the National Association of Realtors showed yesterday in Washington.
S&P 500 Rises Most in 2 Months Amid Budget Deal Optimism (Bloomberg)
U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest advance in two months, amid better-than-forecast housing data and as President Barack Obama expressed confidence on a budget agreement with Congress. Freeport-McMoRan Copper & Gold Inc. (FCX) and Newmont Mining Corp. (NEM) rallied more than 1.4 percent to pace gains in commodity producers amid Middle East tension. Cisco (CSCO) Systems Inc. increased 1.7 percent as it agreed to buy closely held Meraki Inc. for $1.2 billion. Lowe’s Cos. (L) surged 6.2 percent after the home- improvement retailer posted profit that beat estimates. Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) added at least 1.9 percent.
The S&P 500 rose 2 percent to 1,386.89 at 4 p.m. in New York. The benchmark gauge for U.S. equities gained 2.5 percent in two days, the most since July. The Dow Jones Industrial Average added 207.65 points, or 1.7 percent, to 12,795.96. Volume for exchange-listed stocks in the U.S. was 6.2 billion shares, about in line with the three-month daily average. “This change and transition in taxation is much more important for equity allocations going forward than what people realize,” said Michael Shaoul, chairman of New York-based Marketfield Asset Management, which oversees $3.5 billion. He spoke in a phone interview. “The U.S. economy looks pretty good. Earnings are OK. As long as Congress doesn’t absolutely wreck it, it will be fine.”
Obama met with senior Democrats and Republicans on Nov. 16 for talks to avoid $607 billion of automatic tax increases and spending cuts that, if allowed to come into force, might push the country into a recession next year. The S&P 500 rose 0.5 percent on Nov. 16 as House Speaker John Boehner, a Republican, described the budget discussions as constructive and said he would accept increased government revenue coupled with spending cuts. Congress is now in recess for Thanksgiving until Nov. 26.
S&P 500 in Cheapest Bull Market Since Ronald Reagan (Bloomberg)
The post-election rout in U.S. stocks has driven the Standard & Poor’s 500 Index (SPX) down so far that it would have to advance 26 percent to reach the valuation of bull markets since John F. Kennedy was in the White House. Investors have seen $806 billion erased from the value of American equities since President Barack Obama was re-elected Nov. 6 in the biggest decline since May. The combination of falling stocks and rising profits as the economy recovers has left the S&P 500’s price-earnings ratio below the ending level of eight of the nine bull markets since 1962 and beneath the average of any since Ronald Reagan was in power.
Bears say the 4.8 percent drop in the S&P 500 and valuations show investors are losing confidence that Congress and Obama will reach a budget compromise that would keep the recovery from stalling. Bulls, including the top strategists at six Wall Street firms, say that the declines are another reason to buy and that stock prices from Apple Inc. (AAPL) to Dollar Tree (DLTR) Inc. are bound to improve as earnings increase. “The stock market looks cheap because people are way too pessimistic about what growth looks like for the next 10 years,” said Brian Jacobsen, who helps oversee $208 billion as chief strategist at Wells Fargo Advantage Funds and predicts the S&P 500 will rise 47 percent to 2,000 in 2014. “You can get big and rapid move
Recap Stock Index Market Report (CME)
The December S&P 500 trended higher throughout the US trading hours, helped by a rebound in sentiment, favorable earnings and better than expected housing data. More headlines indicating that US officials are willing to work together on the fiscal cliff, as well as confident words from President Obama overnight have done a lot to boost risk-taking sentiment. Earnings this morning from Lowe's and Tyson foods came in better than expected, helping boost those shares significantly higher during the session. US Existing Home Sales in October came in better than expected, which seemed to add further support to the morning gains. Upside leadership came from material and technology related shares. Some traders pointed to a nearly 7% gain in the shares of Apple as a key factor behind the NASDAQ's out performance.
European Stocks Advance Amid U.S. Budget Talks Optimism (Bloomberg)
European (SXXP) stocks climbed the most in more than two months as U.S. President Barack Obama expressed confidence that he will strike a deal with Congress on a new budget to avoid the so-called fiscal cliff. HSBC Holdings Plc (HSBA) added 3.8 percent after the bank said it has held talks to sell its $9 billion stake in Ping An Insurance (Group) Co. BP Plc (BP/) gained 3.6 percent following a report that the oil company plans a 3.7 billion-pound ($5.9 billion) buyback. ING Groep NV (INGA) advanced 3.7 percent after the European Commission granted it more time to sell its insurance operations in the region. The Stoxx Europe 600 Index rose 2.2 percent to 268.58 at the close, rebounding from its lowest level since Aug. 3, as the Republican U.S. House Speaker John Boehner said after the close of European trading last week that he has held constructive budget talks with Obama.
“This is good news and a relief,” said Bruno Ducros who helps oversee about $3.9 billion in equities at CamGestion in Paris. “The risk of a very strong slowdown in the U.S. had scared the market. It was a negotiation game before the election. Now, both sides are ready to agree.” The S&P 500 erased its decline on Nov. 16 after Boehner also said he would accept increased government revenue coupled with spending cuts. Speaking at a news conference in Bangkok, Obama said “I am confident we can get our fiscal situation dealt with.”
European Stocks May Drop After Breaching Draghi Level (Bloomberg)
European stocks will fall further after breaching a level that held since European Central Bank President Mario Draghi unveiled an unlimited bond-buying program, according to a technical analyst at Commerzbank AG. Draghi announced on Sept. 6 a plan to purchase debt in an attempt to regain control of interest rates in the euro area. The Stoxx Europe 600 Index closed at 265.49 on Sept. 5. The gauge slid below that level for the first time on Nov. 16. It had rallied as high as 276.18 on Oct. 18. “We fell below the September level, which in my point of view is a signal that the consolidation which began back in September is going to expand both in time and in space and the next really good support is in the area of the 200-day moving average, 260 to 261,” Petra Grafin Von Kerssenbrock, a technical analyst at Commerzbank, said in a telephone interview.
The Stoxx 600 has dropped 4.3 percent since the re-election of President Barack Obama on Nov. 6 as traders turned their focus to the so-called fiscal cliff that will trigger $607 billion of tax increases and spending cuts next year, sending the U.S. into recession, if Congress doesn’t reach a compromise. The index dropped 1 percent to 262.86 at the close of trading on Nov. 16, for a 2.7 percent weekly decline, the biggest since June. In technical analysis, investors and analysts study price graphs to predict changes in a security, commodity, currency or index.
U.K. Stocks Advance as U.S. Fiscal-Cliff Concern Eases (Bloomberg)
U.K. stocks advanced the most in more than five months on optimism the U.S. will avoid a fiscal deadlock after President Barack Obama said he is confident of winning Congress support for a deal. BP Plc advanced the most this month after a report that Europe’s second-largest oil company plans a share buyback. HSBC Holdings Plc (HSBA) gained 3.8 percent after saying it held talks to sell its stake in Ping An Insurance (Group) Co. The FTSE 100 Index climbed 132.07 points, or 2.4 percent, to 5,737.66 at the close in London, the biggest gain since June 6. The gauge has rallied 9.1 percent from this year’s low on June 1 as the European Central Bank announced an unlimited bond- buying plan and the Federal Reserve started a third round of quantitative easing. The broader FTSE All-Share Index rose 2.2 percent today, while Ireland’s ISEQ Index added 1.2 percent.
“A bounce in risk assets, following days of declines, is the first glimmer of life we’ve seen in equities for quite a few sessions,” said Simon Denham, managing director of Capital Spreads in London. “The promise from U.S. politicians that they will work through the Thanksgiving holidays to cut a deal seems to be giving bulls a reason to dip their toes back in.” Obama said at a press conference in Bangkok yesterday that he is “confident” of striking a deal with Congress to avoid the fiscal cliff, or $607 billion of automatic spending cuts and tax increases scheduled to occur at the start of 2013. He is on a three-nation tour in Asia.
Emerging Stocks Gain as Resource Rebound Boosts Bovespa (Bloomberg)
Emerging-market stocks posted their biggest gain in two months, led by resource shares, as oil and commodity prices gained on prospects the U.S. budget crisis will be resolved, bolstering the world’s largest economy. The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, rose 1.7 percent, the most since Sept. 13. Russia’s Micex and Brazil’s Bovespa advanced as oil surged. Turkish Airlines (THYAO) jumped the most in three years as earnings beat estimates and talks on cooperating with Deutsche Lufthansa AG progressed. Utility Centrais Eletricas Brasileiras SA (ELET6) fell the most in 15 years after Barclays Plc cut the stock to sell. Shandong Weigao Group Medical Polymer Co. led declines on the emerging markets gauge after third-quarter earnings missed analysts’ estimates.
The MSCI Emerging Markets Index (MXEF) added 0.8 percent to 977.98, the biggest gain since Sept. 14, snapping a seven-day losing streak. U.S. President Barack Obama started a new round of deficit-reduction talks with congressional leaders on Nov. 16 to avoid automatic tax increases and spending cuts that threaten to throw the country into a recession. Crude oil advanced to the highest level in a month amid concern that Middle East unrest will disrupt supply. “There’s now the emerging hope that a deal to address the U.S. budget deficit will be reached,” Aryam Vazquez, an economist at Wells Fargo & Co., said by phone from New York. “That’s the key catalyst behind this risk-on climate that we’re seeing, particularly in emerging-market assets. And oil is more a reflection of tensions in the Middle East.”
The S&P GSCI Spot Index rose 2.1 percent to the highest level in a month. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, sank 12 percent, the most in almost a year.
Treasuries’ Foreign Buying Doubles China’s Sales (Bloomberg)
Even with all the concern about the so-called fiscal cliff, another confrontation over government borrowing limits and Chinese ownership of U.S. debt, foreign investors can’t get enough Treasuries. Brazil, Belgium, Luxembourg, Russia, Switzerland, Taiwan and Hong Kong boosted their holdings of U.S. government securities by a collective $264.8 billion since the last debt ceiling debate ended in August 2011, Treasury data released Nov. 16 show. The purchases more than made up for the $123 billion decline in Treasuries owned by China, America’s biggest overseas creditor, to $1.156 trillion. The rise in international ownership shows growing confidence in the U.S. while China’s reduced stake undermines Republican assertions that the nation has gained too much influence. President Barack Obama and Congressional leaders agreed Nov. 16 to begin talks on a long-term fiscal plan to avert more than $600 billion in mandated spending cuts and tax increases scheduled to big Jan. 1 that threaten the recovery.
“Despite our fiscal situation, despite all these issues, there hasn’t been much of a buyers’ strike from the Treasury’s perspective,” Aaron Kohli, an interest-rate strategist at BNP Paribas in New York, one of 21 primary dealers that trade with the Federal Reserve, said in a Nov. 13 telephone interview. “One has been replaced by the other and that really does demonstrate the depth of demand.”
GDP Accelerating to 2.9% Helping U.S. Overcome Sandy Woes (Bloomberg)
The U.S. economy looks set to weather the headwinds from Hurricane Sandy and the budget battles in Washington after picking up speed in the third quarter. Gross domestic product probably increased at about a 2.9 percent annual rate in July-September, according to economists from Goldman Sachs Group Inc. and Barclays Plc. That would be the fastest quarterly growth this year, beating the Commerce Department’s initial estimate of 2 percent. “The economy’s momentum has picked up a bit” as the fundamentals of the private sector “are improving,” said Jan Hatzius, chief economist at Goldman Sachs in New York. He projects third-quarter expansion will be revised up to 2.8 percent, and the fourth quarter may come in at 1.7 percent.
Help is coming from a housing recovery, strengthening job market and healthier household finances that are driving gains in consumer confidence and spending. While the damage from Sandy and an anticipated tightening of fiscal policy mean growth will decelerate this quarter and next, the world’s largest economy may emerge on stronger footing in the second half of 2013. The Bloomberg Economic Surprise Index, which compares 38 U.S. indicators with analysts’ forecasts, exceeded zero in mid- October for the first time since May and was 0.04 on Nov. 16, up from this year’s low of minus 0.4 on July 30. The projected upward revision to third-quarter GDP, due from the Commerce Department Nov. 29, will come largely from a narrower trade deficit and a bigger jump in stockpiles than initially estimated, economists said.
Sales of Existing U.S. Homes Rise Unexpectedly: Economy (Bloomberg)
Sales of previously owned U.S. homes unexpectedly climbed in October, showing record-low mortgage rates are helping spur the world’s largest economy. Purchases of existing houses increased 2.1 percent to a 4.79 million annual rate, exceeding the median forecast of economists surveyed by Bloomberg, figures from the National Association of Realtors showed today in Washington. Property values rose over the past 12 months by the most in seven years as inventories dropped to the lowest level in almost a decade. Gains in home prices are boosting consumer finances and sentiment, which in turn are underpinning the household spending that accounts for about 70 percent of the economy. Companies such as Lowe’s Cos. (LOW) are among those saying the outlook is improving as the market recovers from its worst slump since the Great Depression and foreclosures are whittled down.
“Housing’s cheap, borrowing is cheap and, if you can get credit, it’s a great time to buy,” said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, who projected a 4.8 million annual rate for October sales. “We’re fighting our way through distressed-property sales.” Another report today showed homebuilder confidence climbed in November to a six-year high, propelled by the biggest jump in sales in a decade. The National Association of Home Builders/Wells Fargo sentiment gauge increased to 46, the highest level since May 2006, from 41 in October, according to the Washington-based group.
BOJ in the Balance as Next Government Picks Top Posts: Economy (Bloomberg)
The government taking office after Japan’s Dec. 16 election will pick the central bank’s top three jobs, a chance to reshape policy in the third-largest economy that the opposition aims to seize for unlimited stimulus. BOJ Governor Masaaki Shirakawa, under fire from politicians for his perceived failure to reverse more than a decade of deflation, will end a five-year term on April 8. His deputies, Hirohide Yamaguchi and Kiyohiko Nishimura, will exit in March. Opposition leader Shinzo Abe, favored in polls to win next month’s vote, helped drive the yen to yesterday’s seven-month low by calling for unlimited easing and restrictions on central bank independence. An economy at risk of a second straight contraction this quarter may encourage an Abe-led government to install a pro-easing majority at the BOJ, with two former private-sector economists on the nine-member board already showing signs of favoring more stimulus.
“It looks like we’ll have a clear five majority votes for more BOJ action and that’s a change we haven’t seen in years,” said Kazuhiko Ogata, chief economist at Credit Agricole SA. (ACA) “BOJ policy will become more Bernanke-like in that it will be more aggressive and less focused on side-effects.” The yen was at 81.37 per dollar at 9:12 a.m. in Tokyo after touching 81.59 yesterday, its lowest since April 25. The Topix Index of stocks was up 0.3 percent, set for its fourth day of gains as Abe’s comments fuel speculation on the prospects of more easing.
Inaba Says BOJ Could Ease More If Government Reins in Debt (Bloomberg)
The Bank of Japan (8301) could buy bonds more aggressively if the government commits to lowering the world’s largest public debt, said Nobuo Inaba, a former central bank official and a possible candidate to replace Governor Masaaki Shirakawa in April. “The bank is concerned that continued massive bond purchases will lead to a worsening of the nation’s fiscal position,” Inaba said in an interview with Bloomberg on Nov. 16. “The bank could strengthen its easing and increase the impact of its policies” if the government commits to achieving fiscal health. The yen weakened to a near seven-month low today as markets expect mounting political pressure on the BOJ to lead to further monetary stimulus. The opposition Liberal Democratic Party, leading in polls to win an election next month, has called for “unlimited” easing to end deflation and revive an economy that shrank last quarter at the fastest pace since 2011’s earthquake.
Inaba, who was the BOJ’s executive director, said that the bank’s Oct. 30 joint statement with the government on ending deflation, the first of its kind, was “meaningless” without a firm government pledge to lower the nation’s debt, which stands at 237 percent of gross domestic product, according to the International Monetary Fund. “The government should make a legal promise to maintain fiscal consolidation in the midterm,” said Inaba, 62, who is currently head of the Ricoh Institute of Sustainability and Business, a think tank.
India Investment Opening at Stake as Singh Confronts Ex-Allies (Bloomberg)
Indian Prime Minister Manmohan Singh faces an opposition onslaught when parliament resumes this week, with rivals vowing to block the biggest opening to foreign investment in 10 years as the government bids to stoke growth. The Trinamool Congress party, a former Singh ally, said it will push for a vote of no confidence in the government when parliament meets Nov. 22 over its move to allow foreign supermarket chains to hold a majority stake in retail outlets. The main opposition Bharatiya Janata Party is planning a nationwide protest tomorrow, targeting Singh’s administration over rising prices, graft and the retail plan.
Singh’s Congress party needs to rally its 10-member ruling coalition and win support from parties outside of the minority government to push through steps that will also enable foreign companies to hold bigger stakes in insurance firms and invest in the pension sector. Failure to win lawmakers’ support could extend 24 months of policy paralysis that have contributed to growth slowing to near a three-year low and threaten to undermine the government ahead of elections due by May 2014. “If these important bills get through, the market will cheer as they have been waiting for this for a long time,” said Mumbai-based U.R. Bhat, managing director of Dalton Capital Advisors India, a unit of Dalton Strategic Partnership LLP in London which manages $2 billion in assets globally. “If they don’t, the government’s credibility will be lost. They will be perceived as a lame duck.”
Europe Leaders Face Greek Aid Gap in Brinkmanship With IMF (Bloomberg)
European finance ministers will try to plug a 15 billion-euro ($19 billion) hole in Greece’s finances and win over the International Monetary Fund in the latest installment of three years of debt-crisis brinkmanship. Recycling European Central Bank profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines are among the options under consideration today for filling the new gap in Greece’s public accounts. European governments tore open the hole last week, by giving Greece two extra years to cut its budget deficit. The required extra financing provoked a clash with the IMF, since it would add to Greece’s debt load instead of reducing it. “Greece is in a mess,” James Mirrlees, a Nobel economics laureate, told Bloomberg Television yesterday. Europe won’t solve the problem by “fiddling around with little bits of extra bailout and allowing them to go a bit slower.”
Officials said today’s meeting, starting at 5 p.m. in Brussels, won’t make a final decision to release the next tranche of aid to Greece, partly because parliaments in Germany, the Netherlands and Finland have yet to weigh in. The “troika” representing creditors also has to certify that Greek Prime Minister Antonis Samaras’s coalition government has delivered economy-boosting steps ranging from improvements to tax collection to the deregulation of closed professions. The meeting comes a day after France lost its top credit rating with Moody’s Investors Service, increasing pressure on President Francois Hollande to find ways to bolster growth in Europe’s second-largest economy.
Euro Finance Officials Meet to Jump-Start Greece Accord (Bloomberg)
European finance officials met in Paris today to forge a common position on Greece’s next aid payment as a sputtering economy and a spat with the International Monetary Fund cloud efforts to resolve the crisis. Finance officials from France, Germany, Italy and Spain convened a day before a meeting of the 17 euro nations in Brussels, according to a European Union aide. EU Economic and Monetary Affairs Commissioner Olli Rehn also attended. Lengthening maturities on Greek debt and lowering rates on the country’s bailout loans are the main options being discussed to plug a funding gap, said the official, who declined to be named because the talks aren’t public. The discussions on Greece are “likely to be tense as all players set out their positions,” Thomas Costerg, an economist at Standard Chartered in London, said in an e-mail. “Greece’s debt can is likely to be kicked further down the road, but we could see some constructive statements.”
The Brussels gathering, the second in a week after finance chiefs agreed seven days ago to keep Greece’s bailout aid flowing, underscores skirmishing among EU officials confronting rising unemployment and a slowing economy. In addition to a tussle between the EU and IMF over extending Greece’s debt target, the ministers are struggling to re-engineer the bailout without putting up more money.
France Loses Top Rating at Moody’s in Blow to Hollande (Bloomberg)
France lost its top credit rating at Moody’s Investors Service, which also maintained a negative outlook for Europe’s second-largest economy, citing what it called a worsening growth outlook. France was cut to Aa1 from Aaa, the rating company said yesterday. The Moody’s downgrade follows one by Standard & Poor’s in January and increases pressure on President Francois Hollande to find ways to bolster growth. “France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand” and “structural rigidities” in the longer term, Moody’s said in a statement in Frankfurt.
Since taking office in May, Hollande has pressed Germany to do more to end the European debt crisis, while focusing on tax increases at home to pare France’s budget shortfall. Last month, his government has set out 20 billion euros ($25.5 billion) in new levies on the rich and big companies that are intended to reduce the deficit to 3 percent of gross domestic product next year. The euro slid versus most of its 16 major counterparts after the move by Moody’s renewed concern the debt crisis is deepening. The euro dropped 0.3 percent to $1.2773 as of 8:32 a.m. in Tokyo.
