Ireland Rejects EU Treaty, and Euro Falls Hard

The Euro has a big sell-off in the currency markets Friday, and that has to do with the Irish. Political integration of the European Union is vital to economic integration of the EU member states, which in turn will influence how investors perceive the Euro common currency. Early today, the EU Lisbon Treaty (which is about modernizing the EU’s decision-making process) has been rejected by Ireland, with the Irish Justice Minister Dermot Ahern saying on TV that the Irish have voted ‘No’. This treaty has to be approved and ratified by all 27 EU countries, and so far 18 have already ratified the treaty.

Ireland is now a roadblock to this European integration and could continue to be one, as it is the only EU country that has to put the treaty to a popular ballot as required by its constitution, rather than it being approved through the parliament. This Lisbon Treaty replaces a draft constitution that was turned down by France and the Netherlands three years ago.

US Inflation Up The Most Since November

US inflation data released today by the government showed that headline price pressures are still persisting. The consumer price index rose 0.6% in May, slightly above the 0.5% rise forecast, and the core rate, which excludes food and energy, gained 0.2%, in line with expectations. Meanwhile, the preliminary Reuters/University of Michigan consumer sentiment survey for June indicated that US consumer confidence fell for the fifth straight month, moving to 56.7 in mid-June from 59.8 at the end of May. Consumers haven’t been feeling this pessimistic since May 1980 - but that we already know.

Forex Trading 

The broad winner in the currency market has been the US dollar today. EUR/USD fell 80 pips from 1.5380 to 1.5300, and 1.5280 is the nearest support. USD/CHF rose to a near four-week high of 1.0540, with upside targets around 1.0560, 1.0590-1.0600. As for GBP/USD, it went up to 1.9500 and as expected; shorting interest was heavy there and it bounced 90 pips down to 1.9410.

Comments

[Whidbey]

Will what does it all mean? I would guess it means the EU will lack the economic unity and organization to function efficiently. Integration has always been difficult without a functioning government. The ECB still has an almost impossible task controlling interest rates in the face of some very different fiscal policies set by each member state. The Lisbon treaty wa a band aid and rightfully rejected. NOW what? Disunion?

[Eagle-Chief]

Gracie - I beg to differ! This EU Libson Treaty isn't about "modernizing the EU's decision making process. This is about centralization of power and the ultimate destruction of any sovereignty that the eueopean nations have left. This treaty would "neuter" the nations of Europe & is one more step toward world government and world dictatorship.
Hooray for Ireland for refusing to give up their independence. This is good for Ireland and all the nations of the world!

[JohnPseudonym]

"Consumers haven’t been feeling this pessimistic since May 1980 - but that we already know."

I knew 1980, and this sir; is no 1980.

Just shows how spoiled we've become to think that just a minor economic downturn (to date) would send people to 1980 levels of depression...

Just wait until the economy really is like 1980; people will be jumping off bridges for sure...

Oh, wait, they don't kill themselves anymore. I guess I should say they'll be blowing up schools and shopping centers over their depression about the economy.

[Kiwi_Envoy]

I think Eagle Chief is correct, this treaty is or was a "Wolf in Sheeps Clothing". The people of Ireland are the worlds current freedom fighters rejecting centralised control.

Gordon Brown will never figure this out as he is bewitched by his elite masters and as such will only parrot what Brussells wants him to say.

Well done all of you Irish readers.

[Pangaea]

On Michigan consumer confidence, we've already broken the 1990 low in the mid-60's -- the question now becomes, do we test/break the 1980 low at 51.7...

Following the logic of the previous commenter, which I agree with, the answer would seem to be yes... and the question then becomes, where will the stock market be at that time.

[BioInvestor]

It wouldn't surprise me if Gordon Brown is quitely giving thanks for what happened in Ireland. The EU is a pretty archane entity, formed by a series of treaties and governed by quite a complex system. A few years ago, I bought a book that desribed how the EU is constructed. It's amazingly complex and, frankly, somewhat undemocratic--probably "ademocratic"... might be closer to the truth.

[aquaculture]

youtube.com/watch?v=ME...

[notsosmart]

congrats ireland

[EUARTE]

God Bless Mother Ireland. She has saved Europe again!

The Brussels political mafia have once again been twarted by democracy. Any time a population is "allowed" to vote it votes NO to Brussels. Brussels, the constitution and the treaty are not about modernisation or efficient government. It is about power. Once Europe passed over from a trade group to a political group it was down hill for democracy.

[EUARTE]

If I may add another comment. I find it odd that all discussions on the dollar are concentrated on it's relationship to the €. I may point out that the most powerful currency in South America is the R$. It ignors the up's and down's of the dollar and just goes up. If the R$ gets more powerful or if it gets in trouble is quite important to the world currency market. The author consistantly ignors this.

[notsosmart]

has anybody seen the movie "rollerball"... one world dominated by corporations-thats what the global econ is all about.