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Countries In The Eurozone Will MeetTitle:
EUR/USD Breaks 1.26 Level, Traders Running from Euro
The euro fell below the 1.26 level against the US dollar, reaching lowest level since July 2010. That level was considered to provide strong support to the shared 17-nation currency and, now that the support line is broken, traders are afraid that the currency would spiral down to even lower price.
The members of the European Union are meeting at summit today, but most analysts and traders are pessimistic about the outcome of the meeting. Germany still rejects the implementation of eurobonds even as other countries, including France, support the idea. Herman Van Rompuy, President of the European Council, claimed that the European financial crisis will be discussed at tonight’s meeting in Brussels only “at the very end”.
The Bundesbank stated that a Greek exit “would be significant but ...
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Asian stocks driven lower by downgrades in China, Japan ahead of EU summit
Ahead of a meeting of European leaders, the MSCI Asia Pacific Index dropped 1.5% at 12:31 in Tokyo after investors lost their appetite for risk after they were spooked by the mounting worries over Greece exiting the eurozone, while BoJ held its monetary policy unchanged although growth is slowing.
Greece’s former Prime Minister Lucas Papademos said yesterday that while it is unlikely that the nation will leave the eurozone, the risks are still high. And if this would prove to be the case, other countries may follow, warned Jin Liqun, chairman of China Investment Corp.
Meanwhile, one day after Fitch cut the Japan’s rating by one notch to A-plus from AA with negative outlook, citing “high and rising public debt” burden, Japan showed a slowdown in its exports during April, adding to ...
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Japan Policy On Hold, Eyes On BoE Minutes
The euro (EUR) dropped near a 21-month low falling to 1.2645 from 1.2814 against the US dollar as risk aversion dominates the markets. Comments from former Greek Prime Minister Lucas Papademos raised concerns after he said that Greece has two options, stick to a painful austerity program or face a damaging default and a messy exit from the eurozone. Focus now turns to today’s informal EU summit where France is expected to push a proposal of joint eurozone bonds. 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 US dollar (USD) strengthened against a basket of currencies as fears of a ...
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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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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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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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Strong Germany GDP supports fragile eur
The euro held above a four-month low on Tuesday after German economic growth beat expectations, although gains could prove fleeting as the political stalemate in Greece stokes fears that Athens may renege on bailout pledges and exit the currency bloc.
European powerhouse Germany saw its economy expand in the first quarter at a robust clip of 0.5 percent, shaking off any fears of a recession. But a survey of German analyst and investor sentiment fell sharply in May, while GDP in France flatlined and Italy contracted sharply.
Overall, much of the euro zone was still struggling with a slowdown, putting pressure on the European Central Bank to loosen monetary policy to support the economy.
That is likely to see bears take a stronger grip of the euro. Also, concerns about slowing Chinese and ...
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The Bank of England's Next Move
The Week Ahead
■The Bank of England's next move
■Is this the beginning of the end for the Eurozone?
■Fed officials reluctant to signal more easing
■Broader risk environment outweighs Japanese rhetoric
The Bank of England's next move
The BOE kept rates on hold when it concluded its May meeting last week; it also allowed the asset purchase program to come to an end. Since the UK slipped back into recession in Q1 2012 and the growth figures at the start of the second quarter have continued to look weak, the decision to hold interest rates was mostly down to the sticky outlook for inflation. The attention now turns to Wednesday's Inflation Report.
The focus will be on the Bank's growth and inflation forecasts. The growth forecasts are likely to be revised lower. Even ...
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