France

Trouble and strife in America

Largely immune from the economic and financial tribulations which beset most of Europe and parts of Asia during the first half of this year, it now turns out that America is in trouble as well. Yesterday’s manufacturing ISM for June was a warning sign that all is not well across the pond. Particularly worrying was the collapse in new orders, which plummeted from 60.1 in May to a 3yr low of 47.8 last month, and new export orders, now below 48 for the first time in more than three years.
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03/07/2012 @ 07:25 GMT

Reality bites

The euro’s break below the 1.30 level has been sustained overnight and it’s notable that the dollar has risen in all but two of the past nine sessions, looking at the dollar index chart. The political events in Europe, both in France and Greece, have served to enhance the more risk-averse trend that was already in place last week. Furthermore, in Europe we are seeing fresh signs of stress in the banking sector, such as widenings in cross-currency basis swaps and also Libor-OIS spreads.
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10/05/2012 @ 07:42 GMT

Creeping political paralysis

The implications of events in both France, and more so Greece, are seeping through markets and have made themselves known within most asset classes. In FX, it’s created further pressure on the high-beta currencies, with AUD/USD nudging very close to parity in overnight trading. The Kiwi and Mexican peso are also notably softer. On commodities, gold has pushed below the USD 1,600 level, down 2% yesterday and, significantly, breaking below the long-term uptrend line drawn from the November 2008 lows.
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09/05/2012 @ 07:00 GMT

Drawing the eurozone battle lines

After the initial weakening of the single currency on the back of the weekend’s political developments in both France and Greece, the euro crawled back through most of Monday’s session, although volumes were naturally muted by the London holiday. In France, there is a new President keen to rebalance the agenda in Europe towards growth and away from yet more austerity. In Greece, there is a mad scramble to try and form a government from the results of the latest election, which at present looks to be a tall order.
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08/05/2012 @ 07:33 GMT

France's new road

Increasingly over recent weeks, markets have been digesting the political direction being expounded by Francois Hollande, who has now been confirmed as the new French President. Initially, they were scared by his rhetoric, focusing on his “war on finance”, but have since softened, in part as Hollande himself toned down his message. His victory makes Sarkozy the 11th eurozone leader to lose office since the sovereign credit crisis started. The old adage that elections are there to be lost by the incumbent, rather than won by the opposition, has never been truer.
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07/05/2012 @ 08:23 GMT

The politics of austerity

At its heart, the crisis in the eurozone is one of economics. At the start of Economic & Monetary Union (EMU) there was a great focus on the M, far less on the E. At the risk of oversimplifying things, the lack of economic focus is why things went wrong and why governments pretty much everywhere are trying to make amends. But the political price of this is becoming all too apparent and, whilst the centre of Europe is enacting reforms that strength central surveillance and powers (such as the fiscal compact), there are more signs that electorates and indeed politicians are pushing back.

26/04/12 @ 07:36 GMT by Simon Smith, Chief Economist

Cautious pessimism

During April, markets have displayed a far more cautious tone to that seen through most of the first quarter. FX markets were earlier than most to adopt this tone, with high-beta currencies turning at the start of March, much earlier than most equity markets. As we enter the last full week of April, this approach seems set to continue. The first round of voting in the French presidential election campaign has strengthened the view that Sarkozy is unlikely to see a second terms and markets are slightly nervous regarding his likely successor, Francois Hollande.
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23/04/2012 @ 07:14 GMT

Moody’s blues

Rather belatedly, Moody’s has finally recognised that the AAA debt ratings of both France and the United Kingdom cannot reasonably be defended. Austria has also (justifiably) been handed a warning notice, while six other EU countries including Italy, Spain and Portugal have all had their rating downgraded by at least one notch.

14/02/12 @ 11:41 GMT by Michael Derks, Chief Strategist

Sarkozy the reformer

Behind in the polls and desperate to invigorate his faltering election campaign, French President Sarkozy has belatedly discovered a reformist zeal. In an attempt to reduce the crippling labour-related costs to business, Sarkozy has announced a reduction of EUR 13bln by lowering the social charges levied on employers. This in turn is to be funded through an increase in the sales tax from 19.6% to 21.2% and an additional ’Tobin’ tax on financial transactions.
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30/01/2012 @ 12:44 GMT

The pressure on oil

Given the slower growth backdrop that we are seeing, both in Europe and Asia, it’s interesting to note that oil is pushing 8 month highs this week. It also throws another obstacle into the path of the lower inflation rates that are anticipated but also very much required in Europe, allowing policy-makers to ease policy further (especially in the eurozone) and also reducing the severe squeeze seen on real incomes in many countries. The threat of sanctions against Iran from the EU has been the main factor this week pushing prices higher.
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05/01/2012 @ 07:52 GMT