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MENAFN - Kuwait News Agency (KUNA) - 03/12/2012

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(MENAFN - Kuwait News Agency (KUNA)) This week, markets saw German retail sales weakness and German Bundestag approving the Greek bailout package, by 473 to 100. The outcome came after finance minister Schaeuble warned that a default in the country could trigger the collapse of the single currency, National Bank of Kuwait (NBK) global markets weekly report said Sunday.

Euro zone unemployment numbers were at 11.7 percent in October. The Eurozone is hoping that Greece will be able to repurchase at least EUR 40 billion with private investors, yet the Euro could not make a new high and the currency slipped when Moody's downgraded the ESM to AA1 from AAA and the EFSF to AA1 from AAA.

Globally, commodity currencies were under some pressure. Canadian GDP disappointed given both quarterly GDP and monthly growth were less than expected, while the Australian Dollar held strong over the week despite talks of easing from the Reserve Bank of Australia, the report noted.
Hopes in the US continue over the fiscal cliff resolution despite the public fiscal fighting between President Obama and Boehner this week, financial markets closed the week almost flat.

In summary, the Euro started the week trading at 1.2771 levels then dropped to a low of 1.2878 before turning around and hitting a high of 1.3027 on Friday and ending sessions at 1.2986.

The Japanese Yen hit a seven-month low against the Euro and fell against the US Dollar on Friday, extending losses amid speculation that Japanese monetary policy could be aggressively eased when a new government is formed. USD/JPY opened the week at 82.39 and then dropped to 81.67 only to find support and rally back toward 82.74, closing the sessions trading at 82.46.

The Sterling Pound had a range bound performance as it opened at 1.6030 levels, and then dropped to 1.6023, before gaining some strength and trading as high as 1.6062 on Friday, the currency closed the session at 1.6010.

Commodities continue to trade cautiously with gold slipping on Thursday over 30.00 US Dollars and oil trading with a Middle-East risk premium. Gold ended the week at 1,714.19 while oil at 88.91.

New home sales edged down 0.3 percent in October after posting modest improvement earlier in the year.

The slight drop in new home sales was concentrated in the Northeast and the South. However, Inventories of new homes rose slightly for the month but remain low by historical standards. Even with the weaker sales in October, the housing market recovery remains intact, with sales up 19.8 percent over last year's levels As for the US Gross Domestic Product (GDP), it expanded at a 2.7 percent annual rate, as inventories accumulated and export growth offset weak consumer spending also helping to boost the GDP was stronger corporate profit growth for the quarter, rising to USD 67.3 billion from USD 21.8 billion in the second quarter.

The Fed's Beige Book indicated that US economic activity expanded at a measured pace in recent weeks. Hurricane Sandy and concerns about the fiscal cliff were main factors hampering growth during the surveyed period. While the housing market performed better, manufacturing activities weakened with seven districts reporting either slowing or outright contraction. Business owners explicitly stated that worries over the fiscal cliff delayed their business decisions.

In Europe, Eurozone finance ministers and the IMF reached an agreement on allowing the release of financial aid to Greece. The aid disbursement will not only include the EUR 31.5 billion that should have been released in Q2, but also the additional EUR 12.2 billion of aid that is scheduled for disbursement in Q3 and Q4. They also decided on steps to cut Greek debt to 124 percent of gross domestic product by 2020, and promised further measures to lower it below 110 percent in 2022.

However, indicates the report, there are still some hurdles that need to be cleared, as the latest revision to Greece's bailout programs still requires the approval of seven Euro area parliaments, including Germany, Finland and the Netherlands, as well as the head of the IMF (International Monetary Fund).
On Friday, one main hurdle was cleared, as the German lawmakers approved the latest bailout for Greece by a large majority, despite growing unease about the cost to taxpayers. The parliamentary floor leader of Merkel's Christian Democrats, Michael Grosse, said he was happy with the result of the vote, adding: "Greece must now continue its efforts to reduce its debts and carry out structural reforms." Europe's unemployment rate rose to a record in October as the fiscal crisis and tougher austerity measures deepened the region's economic crisis. The unemployment increased to 11.7 percent from 11.6 percent in September, marking its highest level since the data series started in 1995. The jobless report showed that 18.7 million people were unemployed in the Euro area in October, up 173,000 from the previous month. At 26.2 percent, Spain had the highest overall jobless rate. Portugal's unemployment rate was 16.3, while Ireland reported a jobless rate of 14.7 percent.

German Retail Sales Indicator was down 2.8 percent on the month in real terms and 0.8 percent on an annual basis, the data came well below market expectation of a drop of 0.2 percent on the month and a gain of 1.2 percent on the year. The worse than expected retail sales data dented hopes that private consumption could compensate for the impact of the Eurozone crisis on export.

Gold had its biggest weekly drop in more than four months on concern that US lawmakers may not be capable to reach a settlement in talks aimed at avoiding tax increases and budget cuts known as the fiscal cliff.
Gold traded as low as USD 1,705.64 an ounce before recovering slightly and closing the week at 1,715.19 as signs of global economic slowdown and fears of US recession dented the gold's inflation hedge appeal.


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