Tokyo fell 79 points to 10,013 (0.78%) while is London gained 25 points (0.49%). New York is closed for President's Day.
The markets are waiting on clarity from European leaders as plans for Greece unfold this week. So far, EU leaders have pledged support for Greece in return for Greece taking steps to reduce its record deficits. Any wavering this week on the commitment to Greece could spell further downside for the euro. The euro has now retraced 60% of the 9-month move from March 2009 lows that took the euro from $1.25 to a high of $1.51 in early December. In just the last two and half months, the euro has dropped rapidly now trading at $1.36 as the EU struggles with the burgeoning sovereign debts of the so-called PIIGS (Portugal, Italy, Ireland, Greece & Spain).
Rumors abound that China may revalue the yuan very soon in order to cool down its overheating economy. Goldman Sachs Chief Economist, Jim O’Neill, told Bloomberg News Friday that he thinks Beijing may be ready to allow the yuan to rise by as much as 5% in a one-time revaluation. This would make sense politically and economically for China and would be significant boon to Western economies, specifically Europe which receives double the blow as the dollar falls and the yuan falls with it.
Toyko gained 1.3% overnight yet London and US futures are trading lower. Actions from the China government sent the dollar higher against other currencies and likewise spurred selling in various commodities.
China is dominating the headlines today as The People's Bank of China raised the reserve requirements for banks 0.5%. This is the second time in a month it tightened in order to curb lending in the country. China is attempting keep its economy from overheating in this global economic rebound.
Gross domestic product reports in the Eurozone showed a meek 0.1% growth rate versus the 0.3% expected. Slovakia led the 16-nation group with a 2.0% expansion with France trailing with a 0.8% gain while Greece contracted 0.8% and Germany stalled. The euro made new lows for the year after the data was released hitting $1.353 against the dollar.
