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Dollar Above ParityTitle:
Euro stuck near 22-month low on Greek exit worry
(Reuters) - The euro hovered just above its 22-month low against the dollar on Thursday and remained vulnerable to further declines as the prospect of a Greek exit from the euro zone kept investors on tenterhooks.
The euro eased 0.1 percent to $1.2575. It fell to about $1.2545 the previous day, its lowest level since July 2010. That level should provide initial support, followed by $1.2500.
The euro drew little comfort from an informal summit of European Union leaders that shed no new light on how the euro zone nations intend to tackle its debt crisis, including the threat of Greece's exit from euro.
"It's still hard to see what the endgame will be like," said a trader at a Japanese bank in Tokyo.
European Union leaders urged Greece to stay the course on austerity and complete the ...
Title:
Dukascopy Morning Forex Overview : 05/18/2012
Fundamental Analysis
EUR
"Spain, once again, is where the confidence game is played"
- Sebastian Paris Horvitz, strategist at HSBC Private Bank Suisse
Spain sold the maximum targeted amount of debt, 2.5 billion euros, during yesterday’s auction with spiking borrowing costs. The interest rate of three-year bonds rose to 4.373% from April’s figure of 2.89% while interest rate of five-year bonds surged to 5.106% from 3.374 in March.
USD
"What we’re seeing in foreign-exchange markets is strong demand for the U.S. dollar"
- Steven Saywell, head of foreign-exchange strategy for Europe at BNP Paribas SA
Latest US initial unemployment claim data was released yesterday – 370 000 Americans demanded their jobless benefits last week versus a 368 000 consensus forecast. The Labor Department revised ...
Title:
Dukascopy Morning Forex Overview : 05/17/2012
Fundamental Analysis
EUR
"We expect euro-region inflation to normalize in 2013"
- Michael Schubert, an economist at Commerzbank AG
Inflation in the seventeen nation bloc eased to 2.6 per cent in March from 2.7 per cent the previous month, said the European Union’s statistics office in Luxembourg on Wednesday.
USD
"Uncertainty about Greece and the effects a potential exit out of the euro would have on Europe, the global economy and the financial system in general is driving investors out of stocks into safe havens"
- Markus Huber, head of German sales trading at ETX Capital
The Standard & Poor's 500 lost 0.44%, or 5.86 points, to 1,324.80. The Dow Jones Industrial Average declined by 0.26%, or 33.45 points, to 12,598.55.
GBP
Unemployment figures are a "welcome step in the right ...
Title:
Central Banks' to the Rescue?
Central Banks' to the Rescue?
The Bank of England stole the headlines this morning as it delivered its second Inflation Report of the year. Its message was fairly grim: the UK won't regain its 2007 level of output until 2018. The biggest threat to the UK economy right now according to the bank is the impasse in the Eurozone (something the BOE can't control).
The BOE: "blame the Royal Family and the Eurozone"
However, the one thing it can control is QE and interest rates, and it kept the door to more QE firmly open today. It noted that Q1 GDP figures could be revised higher, however a number of "one off" factors like the Queen's Jubilee bank holiday this year could knock 0.5% from GDP. This "holiday" could have a more damaging economic effect than the Royal Wedding, according to the Bank. ...
Title:
Weak Outlook for Australia
Forex News and Events:
The S&P GSCI Index reversed its 2011 gains in the last six consecutive trading sessions. As a matter of fact, the index tracking 24 commodities broke down 7.6% from a high of 684.15 on April 30th to a more than four-month low low of 634.25 during yesterday’s trade session. This downturn in commodity prices can be explained on the one hand by headlines from the Euro area, as markets seem to be pricing in a second round of elections in Greece as well as a probable EU exit. On the other hand, the marked slowdown of commodity-intensive economies such as China -see Newsletter May 14- pushed prices lower in light of atrophied demand and lower infrastructure investments. From the foreign exchange perspective, the Australian dollar having experienced a 34% appreciation ...
Title:
Euro drops to near 4-month low on Greek deadlock
The euro fell to a nearly four-month low against the dollar on Monday on fears Greece could exit the euro and worries that weak industrial data signaled that Europe was heading for recession.
Concerns about slowing Chinese and global growth also drove down higher-yielding currencies and boosted the safe-haven dollar and yen. The Australian dollar fell to a five-month low against the greenback, while the New Zealand dollar dropped to a 4-1/2-month trough.
Greece's political impasse, as a major Greek leftist party refused to join a unity government or create a government of technocrats, also pushed the country's sovereign spreads over German bunds to their widest level since November.
Greece's troubles helped drive up Spain's and Italy's borrowing costs. Spain's bill auctions also showed ...
Title:
Germany To The Rescue?
This is the fifth day without a firm government in place for Greece; if a coalition is not found soon then we could be heading back to the polls, which open up the possibility of a prolonged period of Greek political instability. There was some hope this morning of the Conservatives forming a coalition with the Socialists and other moderate pro-bailout parties that would have a mandate to govern until 2014. This helped to lift the euro from its daily lows; however for a sustained rally in risk we need to get a firm commitment that a 'moderate' pro-European government will take the reins of power in Athens. Unless that happens then the markets are likely to remain jittery.
Mixed signals
The markets are particularly cloudy today. Some bullish reversal patterns that formed yesterday were ...
Title:
USD Softer as Sentiment Stabilizes
USD Softer as Sentiment Stabilizes
USD is mostly softer as sentiment stabilizes and amid slightly weaker US economic data. Weekly initial jobless claims dropped by 1k to 367k (cons. 368k) from an upwardly revised 368k (prior 365k). The 4-week moving average in initial claims fell for the first time in 5 weeks with a drop of -5.3k indicating marginal improvement in labor. The March trade balance showed a wider than expected deficit of -$51.8B (cons. -50.0B, prior -45.4B) as imports jumped 5.2% – the largest increase in over a year. European bourses are currently trading in positive territory, US stock futures are suggesting upside at the open, and UST yields are higher across the curve indicating a better risk environment today. The dollar index is lower and testing the 80.00 figure as ...
Title:
Risk Recovery Looks Fragile
It's one step forward and two steps back for risk at the moment. On the one hand we heard yesterday that Greece was 'more than likely' to receive its next aid tranche in order to cover a bond redemption due later this month, yet the political deadlock from Sunday's election is now entering its fourth day. The chances are that Greece will have to go back to the polls next month (at the cost of about EU 18mn) and the financial markets are concerned that the electorate will choose an anti-austerity party as its first choice.
The choice is up to the Greeks
However, Greece may not like austerity, but it also wants to remain in the Eurozone. EU officials, particularly in Germany, have broken the taboo that no one can leave the Eurozone and started to publically announce that Greece has to ...
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