The news that Ireland has formally requested aid from the European Commission and the IMF has brought some stability to markets, with the euro extending gains in early morning trade and regional share prices rallying. The dollar/euro is pushing towards the $1.38, while sterling/euro has also seen solid gains since Friday on hopes that a deal would be done. The full details of the package have yet to be put in place but news reports this morning say that it could be €80-90 billion and will include money for the banking system which will be further restructured. According to the government’s statement at a press conference yesterday, “the financial assistance package to the Irish state should be financed from the European financial stabilisation mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU Member States”.

“The programme will address the budgetary challenges of the Irish economy in a decisive manner on the basis of the ambitious budgetary adjustment and comprehensive structural reforms that will be contained in the Government’s Four Year Budgetary Strategy”. Expectations are that the four year plan will be released later in the week, possibly Wednesday. During the government’s press conference, Taoiseach Mr Cowen said that corporate tax rates would not be changed as part of this deal. Despite the positive reaction overnight, eurozone sovereign debt issues have not been completely sorted out yet with Greece, Portugal and Spain likely to remain in the spotlight, but for now at least some stability has been restored. The Irish situation looks set to continue to dominate headlines over today, with just the flash estimate of eurozone consumer confidence for November due for release.

Looking at the performance of the higher yielding currencies, the NZD saw weakness on Friday following the announcement by the S & P to downgrade the outlook on New Zealand’s Foreign currency rating to negative, the markets however have seen little reaction following the initial weakness seen on Friday and remains very much stable at present. Finance minister English said the move shows the need to reduce New Zealands heavy reliance on foreign debt. The AUD on the other hand has gained strength and continues to perform exceptionally well against its counterparts, the GBP/AUD level currently trades at 1.6160 and looks set to continue its positive intra day movement as the US market opening approaches.

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Tom Trevorrow

Senior Trader

Tel: +0044 1736 335264

Email: Tom.trevorrow@torfx.com