Europe closing down but off the lows. Many traders felt that the lows of the day might be reached in the morning as we go into the European close. The dollar has weakened, the euro strengthened as the issues facing Europe are perhaps even greater than the U.S., due to the fractious political environments:
1) a public spat between IMF (Lagarde) and the European Union (EU) over bank balance sheets;
2) the Italian austerity plan is going to Parliament next week and Prime Minister Berlusconi is already showing signs of waffling;
3) a German constitutional court decision on Wednesday on the Greek bailout and EFSF extension;
4) Finland keeping a hard line on collateral.
All of this is made much more difficult because growth is slowing.
As for the "weaker euro, stronger dollar": U.S. rates can't fall any further, but higher interest expectations elsewhere come off on weaker U.S. data.
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