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Dukascopy Afternoon Forex Overview : 05/18/2012
Dukascopy Fundamental Analysis
EUR
Moody's reduced credit rating of 16 Span's banks, citing a rise in bad debts in the country's financial sector and overall deterioration of the economic environment. The decision came after shares of Bankia lost another 14%. The largest banks such as Banco Santander and BBVA were downgraded while ten out of 17 banks were put on negative watch, implying that further credit rating cuts are possible.
USD
As the U.S. dollar gets stronger, investors are concerned that aggravating debt crisis in Europe will reduce demand for oil. Therefore, oil shows decline for a third week. Crude oil lost 25 cents yesterday and reached the 6-month low of $92.56. Brent oil for July delivery slid 0.5 percent to finish at $106.99.
GBP
Following a downgrade of 16 Spanish banks, ...
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Euro rallies from 4-month low but crisis remains
The euro rose from a four-month low against the dollar on Friday as investors pared bets against the single currency after a 4 percent drop this month, but concerns about Greece and Spain were likely to keep it under pressure.
Despite Friday's gains, investors preferred the relative safety of the U.S. dollar and the Japanese yen. They were reluctant to increase risk exposure after Moody's cut the credit ratings of 16 Spanish banks on Thursday.
With no U.S. data to drive foreign exchange markets, investors are most likely to consolidate positions ahead of the weekend following days of euro losses.
"The biggest risk today is position squaring into the weekend; however there appears to be increasing evidence that the euro is likely to move lower in the days ahead," said Camilla Sutton, ...
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Crude Oil Remains Negatively Biased on Growth Concerns
Crude oil is still trading bearishly ahead of the results of the G8 summit, where the commodity is affected sharply by the deteriorated sentiment and growth-concerns, taking into consideration several European nations have already slipped into recession fueling the debt crisis to hinder the pace of global recovery.
Crude oil futures for June settlement are hovering at the moment around $91.85 per barrel, continuing the downside movement that started for $105.00 levels. The futures started the session at $92.62 and recorded so far a high of $92.89 and a low of $91.60.
Confirmations regarding the coming recession in Europe are mounting, where the political turmoil in Greece in addition to the double-dip recession in Spain raised fears today after rating agencies downgraded the Greek credit ...
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Copper bounces; eyes third weekly loss
Copper bounced on Friday, helped by investors balancing positions ahead of the weekend's G8 meeting, but was set to decline for a third week on concerns that deepening debt problems in the euro zone could drag on China's economy and erode metals demand.
Three-month copper on the London Metal Exchange traded at $7,744.50 a metric ton (1.1023 tons) in official rings up 1.3 percent from Thursday's close of $7,649 a metric ton.
However the metal, used in power and construction, has dropped by 10 percent since late April, trimming the year's gains to just 2 percent.
"There is the combination of Europe and all that entails, and concerns about the extent of the slowdown in China weighing on prices," BNP Paribas metals strategist Stephen Briggs said
"But our view is that China is going to ...
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Risk Appetite, Better Situation Help UK Pound
UK pound is being helped on two fronts today. General risk appetite, with the focus on the Facebook IPO, is helping the sterling against the US dollar. On the other hand, pound is higher against the euro, as concerns about what’s happening in the eurozone make the pound a preferred choice as a European safe haven currency.
Right now, pound is gaining against the US dollar as some disappointing news (including the unemployment claims data released this week) provides a foundation for risk appetite. Also providing a foundation for risk appetite is the Facebook IPO. Equities are responding well to the excitement of one of the biggest IPOs of all time, and that is helping the pound.
Against the euro, pound is gaining in large part because it’s not the euro. With Moody’s unleashing downgrades ...
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Signs that Bearish Sentiment May be Wearing a Bit Thin
Signs that Bearish Sentiment May be Wearing a Bit Thin
The Facebook IPO today has temporarily knocked Europe from the headlines as the world's eyes are focused on the Nasdaq at 1430 GMT/ 0930 ET when Facebook will start trading for the first time. CNBC anchors have been wearing honorary hoodies to mark the occasion so it must be big. I still find it hard to reconcile how FB is worth $140 billion when the site is used by both advertisers and cyber bullies, but perhaps I'm missing the point. The point today is that it is the third largest IPO in the US ever, Zuckerberg will be a gaszillionaire and U2's Bono is likely to earn $1.5bn from his initial $90 million investment. Facebook might not change the trading world, but it could change the Forbes rich list quite dramatically.
Could ...
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Euro hovers near 4-month low as crisis brews
The euro lifted off a four-month low against the dollar on Friday, as investors pared bearish bets after earlier falls but concerns about a Greek euro exit and instability in the Spanish banking system were likely to keep it under pressure.
Investors preferred the relative safety of the U.S. dollar and the Japanese yen and were reluctant to buy riskier assets after Moody's cut the credit ratings of 16 Spanish banks on Thursday.
The euro tumbled to $1.2642, not far from its lowest of the year, before recovering to trade 0.2 percent higher at $1.2715. Traders cited large option expiries at $1.2700 which were likely to cap gains.
Some traders said the euro's recent decline could slow, given investors may be wary of holding positions over the weekend when leaders of the G8 major industrial ...
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Brent hits 2012 low on Europe turmoil, weak U.S. data
Brent crude slipped below $107 per barrel on Friday to its lowest in 2012 as a worsening euro zone crisis and weak U.S. economic data raised fears of a global slowdown that could dent oil demand.
Worries about the euro zone, already roiled by Greek political chaos, mounted as Spain slipped into a recession, pushing the euro to a four-month low while sluggish data out of the United States sent worrisome signs about a still-fragile recovery at the world's largest economy and top oil consumer.
Brent crude was down 64 cents to $106.85 by 2:47 a.m. EDT after slipping to its lowest level for the year at $106.40. Front-month Brent is on track to post its largest three-week fall since May 2011.
U.S. crude was down 58 cents to $91.98, heading for its largest three-week fall since August 2011.
" ...
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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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