European equities opened higher this morning although pulled off the weekly highs after some touted profit-taking heading into the weekend and volumes remaining light due to the Thanksgiving holiday in the US. Spanish equities have underperformed other European bourses this morning after S&P lowered their ratings on a number of Spanish banks and reaffirmed a negative outlook. S&P cited the rapid deterioration of the Spanish economy and credit worthiness of public and private sector borrowers as the main risks facing the industry.
German IFO Business Climate data beat expectations at 101.4 vs. Exp. 99.5 which saw strength in EUR/USD moving 28 pips to the upside breaking the 1.2900 handle in immediate reaction. Comments from the IFO initially appeared positive with them commenting that the German economy is holding up despite the economic crisis however further comments said GDP would weaken in Q4 compared to Q3.
Markets had appeared cautious heading into the data release as overnight, German Chancellor Merkel said that it looks unlikely for the EU to come to an agreement on the budget at the final talks today in Brussels, however this morning Merkel said it was not dramatic if no budget deal was finalised today.
Heading into the North American crossover, the session is expected to remain light due to Thanksgiving although Canadian CPI is due to be released at 1330GMT/0730CST. As a reminder there will be early closures in the US due to the public holiday.
Print 11:57, 23 Nov 2012 - Market Analysis - Source: RANsquawk
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