Equities in Europe traded lower throughout the session today, as concerns over growth prospects in the bloc remained at the forefront after the Bundesbank cut its German 2013 GDP forecast to 0.4% from 1.6%. In addition to that, the central bank noted that risks to economic outlook are on downside and that German economy will likely shrink in Q4. Bleak outlook for the locomotive of the bloc was further reinforced by the release of weaker than expected German IP, which came in much weaker than expected at -2.6% vs. Exp. 0.0%. In tandem with weaker stocks, EUR/USD also trended lower, as markets continued to re-price potential of negative deposit rates, as evidenced by negative EONIA FWD.
Looking elsewhere, upon the news of the Japanese earthquake, the JPY saw initial strength, on the back of expectations of repatriation flows from Japanese Insurers before bouncing off lows after it was reported that there were no irregularities in any of the nearby power plants. Finally, it is worth bearing in mind that Greek 2023 bonds are trading at 40.30, above the max. price set by the PDMA at 40.10, to carry out debt buyback plan, the bond buyback closes at 1700GMT today and this morning Greek finance ministry source said that the country has no plans to extend the deadline for bids beyond today. Going forward, market participants will now await the release of the latest NFP report by the BLS at 1330GMT which will likely be littered with special factors.
Print 12:03, 07 Dec 2012 - Market Analysis - Source: RANsquawk
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