Euro Debt Fears Continue

Further concerns arose overnight that Ireland may not have the political will and ability to see through any rescue arrangement. This comes on the back of the Government planning EU800m in welfare cuts for 2011 while keeping the corporate tax rate constant at 12.5%. As a result of intertwining debt talks, the German Chancellor mentioned that the prospect of serial European bailouts was “exceptionally serious”.

Markets will be on watch over the next few sessions as North and South Korea exchanged artillery fire. As the news broke risk weighted assets such as the AUD were sold of in large volumes, so the financial markets will be watching with eyes and ears to see where this will lead.

In the US, the minutes of the November 2-3 FOMC Meeting showed that members were varied over the benefits of the QE2 package, which was released. The document stated that some members were concerned that the Quantitative Easing would have limited economic benefit while placing upward pressure on inflation and devaluing the $USD. US GDP was also revised higher to 2.5% from the preliminary 2%, which is good news for world growth prospects.

In Australia today there is no key data, however we will see Construction Work Done (1.7% rise expected) for Q3, along with the HIA housing affordability data. There is also plenty of data to be released ahead of the Thanksgiving Long weekend with New Home Sales and Durable Goods orders in the US. The Europe session will be highlighted by UK GDP and the German IFO.