Tag Archives: debt crisis

Oil Price Around $71 Due to Euro Zone Crisis Concerns

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Oil Prices Stand at 71 Dollars Euro Zone CrisisThe cost of oil is around $71 per barrel on Tuesday. This is primarily due to the concerns regarding the euro zone crisis. This concern outweighs the optimism regarding U.S. demand. Data has shown that the crude stocks will fall for the largest user of fuel in the world. As a result, the stock markets in Europe fell, and it didn’t help that Hungary has debt problems.

For the second week in a row, the crude inventories of the U.S. have fallen. There is a decline in import volumes. By Tuesday at 2030 Greenwich Mean Time, the American Petroleum Institute will show the inventory figures, and the U.S. Energy Information Administration will follow suit in Wednesday.

These data will be really important and will determine the level of demand of gasoline in the U.S. and the condition of the driving season. For now, prices for oil will stay at around $70 – $75 per barrel, which is an acceptable price for OPEC and everyone else concerned.

However, the Euro debt crisis and the U.S. jobs weakness may result in fewer demands for oil, which will pressure their prices. The BP oil spill in the Gulf of Mexico also affected Britain and the U.S. in making tighter legislation after the incident.

Hungary’s Deficit Goal to be Aimed this 2010

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Hungary Economic DeficitAccording to Hungary’s secretary of state Mihaly Varga, the real status of Hungary’s public finances is hidden. This implies that the country needs stronger and more effective measures to reach their target of a 3.8 percent of GDP. Last Friday, the euro reached its lowest mark in four years because many were afraid of a Hungarian debt crisis, which was even supported by the spokesman of the prime minister. Furthermore, officials were afraid and were quite certain that they will not be able to avoid the same fate that was met by Greece.

Mihaly Varga said all these comments might be exaggerated, and that it is quite possible to attain the planned deficit target. When he was asked to state any predictions or projections, he did not say anything, but instead, stated that the government of Hungary will announce an action plan after a meeting which will last until Monday.

International lenders are also playing a monumental role here, because they reached this agreement with Hungary, regarding the achievement of a 3.8 GDP by this year. Peter Szijarto, the spokesman of Hungary’s prime minister, stated that it is very likely that they will experience what Greece has experienced in terms of debt crisis, but he also mentioned that they will act very quickly against this path.

US Optimistic about Economy and Commodities and Stock Rally

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US Optimistic about Economy and Commodities and Stock RallyRallying commodities and stocks, along with the predictions that factories and jobs will get a lot of orders are indications that the United States of America is enjoying a boost in economic terms. In contrast, the yen is getting weaker.

As mentioned, the economic strengthening is most apparent at the US industries incorporated more measures to improve the working conditions of their workers. This includes reduction in number of firings, advancements in private payrolls, and an increase in orders from the factories. In fact, the increase in payroll has been the highest in nearly 17 years.

In fact, this is not only happening in the US, but through most parts of the world. Some people were concerned that the debt crisis in Europe would stunt the economic growth around the world, but in fact, the opposite is predicted to happen. In the words of Tobias Merath from Credit Suisse Group AG, “the global economic recovery is continuing and most economic indicators are surprising to the upside.”

This economic booth is also evident in the fact that 70,000 jobs have been added for May, and that the number of jobless is significantly reduced. Advancement in commodities is also an indication for good economic health for the US. This includes increase in crude oil and General Motors Company and Ford Motor Company sales, among others.

Yen Goes Down After Japanese Prime Minister Resigns

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Japanese Yen Falls After Prime Minister Steps DownA downward trend has been seen on the Japanese yen following the resignation of Japanese Prime Minister Yukio Hatoyama on June 2 (Wednesday). Business analysts has been skeptical about this trend because the successor might be in a dilemma with the weaker currency in his lap.

It’s been two weeks that the yen has suffered against the dollar after Hatoyama and his deputy left their posts in their attempt to improve the winnability of Japan’s ruling party in the elections next month. The uncertain political conditions in Japan raised doubts that the yen can recover after Hotayoma became the fourth prime minister to resign in four years.

Although Hatoyama’s possible replacement Finance Minister Naoto Kan has positive vibes with the weaker yen, business analysts are not convinced about his idea. Kan has been vocal about this as earlier this year he mentioned he wanted the yen to become weak a lot more because most businesses preferred a dollar/yen rate around 95 yen, which would boost their income. Subsequently, Kan has mostly supported the finance ministry line that stable currencies are appealing as well as markets ought to fix foreign exchange levels.

Some investors might just see this in a positive light as the yen losses were limited. They can benefit through risk aversion by taking advantage of the European debt crisis. Simon Derrick, head of currency research at BNYM, suggested that: “Almost anything you throw at the yen these days is negative and yet here we are at these levels. That tells you demand for yen is for reasons other than what’s going on in Japan.”

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