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As The Eurozone CountriesTitle:
Euro Falls as Eurobond Debate Begins
Euro is dropping today as eurozone leaders meet to discuss growth options for the 17-nation currency zone. Eurozone growth has been sluggish, verging on recession, and that is impacting the ability of member states to handle their sovereign debt. One of the options being floated as part of a package is a eurobond. However, Germany is opposed to such a measure.
Euro is heading lower today, mostly due to uncertainty. There is uncertainty surrounding the Fitch downgrade of Japan. But mostly there is uncertainty in the eurozone. While there are widely published numbers that seem to indicate that most Greeks want to remain in the eurozone, the actions in the election seem to suggest otherwise. The leaders Greeks voted for are largely against austerity measures, and Greek citizens themselves ...
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The Endgame of the Greek Crisis
Forex News and Events:
It has taken two-and-a-half years, and nearly USD 300bn of IMF/EU funds for markets to finally weigh in a more probable than not exit of the debt-laden country. Greece’s EMU exit is imminent for the second time in the last six months. Surprisingly though, the trigger for the recent gloomy expectations for Greece was not exclusively of an economic nature but also politics. During May 6 elections, the Greeks expressed their unwillingness to abide by the agreed-upon austerity measures. It wouldn’t have been a very dangerous position had Greece been solvent, but regardless of EU officials’ reassurance of continued help for Greece throughout the process, the country would run out of funds for the next installments due end of June and early July. In addition to markets ...
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Euro Rebounds, Focus On The UK Inflation
The euro (EUR) edged higher to 1.2824 rebounding from 1.2724 against the US dollar on hopes that EU leaders will agree on steps to fight the debt crisis in Europe. Investors expect the French President Francois Hollande to suggest joint eurozone bonds at the EU meeting in Brussels on May 23. The idea of joint bonds can help with funding difficulties for some heavily-indebted eurozone countries but that policy has been rejected by Germany before. EU leaders are also expected to focus more on growth and ways to help Greece stay in the euro. The single currency remains under pressure as the market is worried about Spain’s growing financial problems as well as developments in Greece ahead of a repeat election in June.
The US dollar (USD) stumbles against a basket of currencies on an improved ...
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Dukascopy Morning Forex Overview : 21/05/2012
Fundamental Analysis
EUR
"Fears of a Greek exit from the euro zone and the negative consequences from that are prevailing"
- Ben Kwong, KGI Asia
European stocks edged lower after Fitch downgraded Greece’s credit rating to ‘CCC’, implying that the country is vulnerable and highly dependent on favourable economic conditions to fulfill its financial obligations.
USD
"If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse and the Fed feels like it needs to move"
- Nathan Sheets, Citigroup Inc.
Fed policymakers might potentially launch another round of Operation Twist rather than a direct asset purchases in case of increased risks or further weakening of the US economy.
GBP
"We must work together to give ...
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Asia Session: Wen Steals The Spotlight From The G8 Summit
The dollar and the yen were lower across the board as Chinese Premier Wen spurred hopes of more growth stimulating measures from Beijing. At the same time, equity markets were lifted by the risk-on sentiment, but gains were limited by lingering fears about a possible Greek exit from the euro.
Furthermore, the G8 summit over the weekend failed to provide any guidance for investors, with those in attendance simply repeating well used comments about keeping the Eurozone intact and ensuring Greece doesn’t fall off a cliff. It now appears the countries in attendance are renewing calls for the larger and healthier Eurozone nations, like Germany, to assist their struggling neighbour countries, which comes at a time when debt markets appear to be questioning the health of Italy and Spain. Yet, ...
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Weekly Economic and Financial Commentary : 19/05/2012
U.S. Review
To QE3 or Not To QE3: That is the Question
- Some market participants are beginning to speculate about another round of quantitative easing. Although recent growth indicators have not been particularly stellar, the economy is still growing. Moreover, core CPI inflation in the neighborhood of 2 percent means that the threshold for more QE is relatively high.
- Overall, indicators were positive during the week. Housing starts increased by 2.6 percent in April, the Empire Manufacturing index improved to 17.09 in May from a 6.56 print in April and retail sales printed a 0.1 percent increase in April, in line with expectations.
To QE3 or Not To QE3: That is the Question
QE3 seems to have more lives that a cat; it comes back into the forefront of the U.S. economy discussion ...
Title:
Downgrades Day
Forex News and Events:
In a race for downgrades, rating agencies took action targeting the two most burdened countries in the EMU. Moody’s confirmed today a rumor about the downgrade of 16 Spanish banks after having downgraded four Spanish regions, which added more pressure to the the Spanish economy. The increase in risk was reflected by 4-year Spanish Bonos yields, higher at 5.106% against a previous 4.319%. Fitch took over the Greek front by downgrading the country to CCC, adding that all EU countries would be on “Rating Watch Negative” if no pro-bailout government were formed following the elections on June 17. What’s more, while Greek banks are struggling for liquidity from EUR 700mn withdrawals since the elections and Greek central bank governor Provopoulos expecting EUR 100mn more, ...
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Eurozone Bank Worries Send Euro Lower
Eurozone bank worries are sending the euro lower today, along with rises to funding costs. Uncertainties about what’s next for Greece and for the eurozone remains, and that is weighing on the euro in Forex trading right now.
German bund futures hit record highs today, reaching 143.79 at one point, and Spanish bond yields are on the rise. Spanish borrowing costs continue to be of concern, since it means that the debt will soon be unaffordable for Spain, and a crisis could ensue. Italian bonds are higher as well, but that country remains somewhat in the background as focus remains on the growing political difficulties in Greece and the banking problems in Spain. However, the fact that Italy has its own problems is likely to become an issue at some point, when Forex traders and others move ...
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Greece Fears Pressure, BoE Cuts Growth Forecast
Greece Fears Pressure, BoE Cuts Growth Forecast
The euro (EUR) recovered a little yesterday against the dollar edging higher to 1.2758 from 1.2681 as risk sentiment in the market improved slightly. Investors remain worried about Greece's ability to avoid bankruptcy and stay in the euro ahead of Greece's second election. Greece put a senior judge Panagiotis Pikramenos to be the leader of the Greek caretaker government until election on June 17. The single currency may remain under pressure on fears that a Greek exit from the euro may have a serious impact on countries such as Spain, Italy and Portugal. Some Greek banks were moved to an emergency funding assistance program due to the deteriorating quality of their capital.
The US dollar (USD) strengthened against a basket of currencies ...
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