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Another miss in the Euro area

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  • European ministers failed to agree on the terms of bank bail outs in a Euro area banking union - and so another hope for making the Euro actually work as monetary union quietly dies. A Franco-German failure to agree is blamed, and raises troubling questions about political leadership in the Euro.
  • China has injected more liquidity into its money markets again, signalling that the "crisis that wasn't" really was not a crisis (more of a rebuke to the banking system). China and the UK agreed a currency swap line - China's first with a reserve currency (albeit the third reserve currency).
  • In Japan the LDP and their partner Komeito won a convincing victory in the Tokyo local assembly elections. This is likely to be seen as a signal for the elections to the upper house of the Diet that are due next month, and a similar win there would increase PM Abe's political authority significantly.
  • The data calendar is relatively light. The German ifo survey of business confidence is not expected to show much change in optimism. The UK offers up the credit conditions survey from the Bank of England.
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