Euro Hinges On Spain

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 ...

The yen was a shade stronger across the board on Thursday but could see renewed pressure as buying linked to Japan's financial year-end looks to have peaked. Although the last day for spot trading in the business year to March 31 was on Wednesday, real-money flows from Tokyo kept main currencies under pressure against the yen, with some exporters spotted selling the dollar in large amounts. The yen's broad advance was driven mostly by its gains versus the biggest loser on the day, the Australian dollar, and picked up steam versus the greenback after stop-losses were triggered as the pair breached a recent support level. "Despite the year-end deals going through and dovish comments from the Fed's Bernanke, we're seeing the dollar is resilient against the yen, said Sumino Kamei, senior ...

Forex News and Events: Yesterday's successful vote on Greek austerity looks to have set the stage for a summer risk rally. The vote of 155 to 138 passage of the first part of the austerity plan was broadly positive for risk sentiment and risk correlated trades rallied across the board. EURUSD trading was volatile but despite some pre-vote excitement, the bullish sentiment has remained. EURUSD rallied to a June high of 1.4521 and EURCHF rose to 1.2095, indicating that the fears of EURO demise have subsided. AUD & NZD continue to trade on the growing optimism, with the AUDUSD climbing above 1.0720 and NZDUSD clearing 0.8300 to 0.8319, hitting new all time highs. AUDJPY moved above its bearish downtrend ceiling, indicating a broader interest in carry trades--we would be looking to dips, to ...

The Week Ahead Highlights Markets consolidate before The End of the World Greek problems get worse before they get better? The euro hinges on Spain Japan's economy still in a 'very severe' state The Loonie may see weakness ahead Key data and events to watch next week Markets consolidate before The End of the World This past week saw most major asset markets and currencies essentially consolidate around recent lows following the sell-off in the first half of May. Incoming data, however, continues to suggest increasing sluggishness in the major economies. In the US, housing data weakened further, both the Philadelphia and Empire manufacturing indexes declined, industrial production flattened, and the index of leading indicators dropped for the first time in 10 ...

Previous session overview The euro edged higher against the dollar and yen in Asia Friday as rising Tokyo shares and receding concerns over Spain's debt problems gave a boost to risk appetite, prompting investors to buy back the European currency. Signs of solid demand at a Spanish sovereign debt auction overnight helped ease fears that the nation could suffer a Greek-style crisis, dealers said. That gave a slight tailwind to stock markets, and Japan's benchmark Nikkei 225 Stock Average was up 0.1% in early afternoon trading. However, by around 0530 GMT the Nikkei had slipped into negative territory, down 0.1% at 9985.28. The European single currency gained to as high as JPY112.81 and USD1.2414 compared with JPY112.72 and USD1.2388 in New York late Thursday. As of 0450 GMT, the euro was ...

"We expect and we are confident that the Greek government will take all the decisions that will permit it to reach that goal," Trichet said. A statement made earlier, but reiterated by EU members of the G7 this weekend. In addition, EU members spent time trying to reassure non-EU members that Greece’s (Portugal ’s, Spain etc) fiscal problems can be solved without the help of external bodies such as the IMF. However, judging from recent price action, this rhetoric hasn't helped ease the markets concerns. Rumors and tittle-tattle continue to swirl around the sovereign credit issue such as the Bundesbank preparing a loan for Greece and secret ECB weekend meetings, all keeping EUR traders on their toes. ECB Economist Stark comments, that a new mechanism which would support individual EU ...