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EurozoneTitle:
Asian stocks drop as Greece put the euro zone’s unity at risk
Asian stocks dropped, with the MSCI Asia Pacific Index sliding 0.9% at 14:00 in Tokyo, as the Greek political deadlock continues, the slowdown in China’s economy was confirmed again while Europe’s economy is expected to shrink for the first time since 2009.
Greece continues to put the euro zone unity at risk, as the political parties are still in talks for a ninth day today, in a last attempt to form a government and avoid another round of elections in June, during which the far-left anti-bailout party Syriza is expected to win, which may push the country to exit the eurozone.
Also weighing on sentiment was Moody’s decision to downgrade 26 Italian banks yesterday, fueling concerns over Europe’s growth and keeping risk appetite subdued, especially before a report that may show Europe’s ...
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Dukascopy Afternoon Forex Overview : 05/14/2012
Dukascopy Fundamental Analysis
EUR
Industrial production in the 17 countries that use the euro fell unexpectedly in March, leaving little doubt the region contracted for a second straight quarter in the first three months of the year and returned to recession, data by Eurostat showed Monday.
USD
Stocks fell, commodities declined to their cheapest level this year and the euro weakened to a three- month low on concern that Greece will exit the single European currency and after German Chancellor Angela Merkel’s party lost a state election.
GBP
The government, and many economists, say the U.K.'s austerity plan has succeeded in reassuring financial markets that the government is focused on wrestling down the country's debt, which had ballooned to the highest levels since World War II. As a ...
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Aussie Struggles on the Forex Market
Australian dollar is struggling on the Forex market, especially against the US dollar. Concerns about what’s happening in Europe are affecting risk appetite, and sending Forex traders away from riskier assets like the Aussie and to low beta currencies like the US dollar and the Japanese yen.
Risk appetite is playing a big role in the Australian dollar’s performance today. Concerns that the Greece might actually leave the eurozone are increasing, and there are worries that Spain can’t handle its debt. This risk appetite is leading to losses by high beta currencies like the Australian dollar against low beta currencies like the US dollar and the Japanese yen. Australian dollar is, however, higher against the euro, since the euro is in such a bad state.
The Aussie’s case isn’t being helped ...
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China’s growth engine cooling down
Forex News and Events:
As anticipated in Friday’s newsletter, China cut its Reserve Requirement Ratio for the second time this year. Shielded by easing inflation, Chinese authorities relaxed their grip on banks’ cash reserves parked at the PBoC through a 50 basis point cut effective starting May 18. This measure will allow the RRR to drop to 20% for the main national financial institutions and will release an estimated CNY 400bn in capital into the market. The move came after the publication of a weaker-than-expected Chinese Trade balance on Thursday, indicating exports and imports grew by 4.9% and 0.3% y-o-y respectively, a far cry from the 10 and 11 percent goals for the year. The near-zero import growth could be explained by the piling up of metal domestic inventories and might affect ...
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Euro at 3-Month Low as Greece May Leave Eurozone
The euro fell today, reaching the lowest level in more than three months against the US dollar, as speculation that Greece may leave the eurozone drove away investors from the shared 17-nation currency.
Greece is still unable to form a coalition government after a week of talks and negotiating. Even if the a government would be formed, the country may still leave the currency union as the Hellenic Republic is reluctant to implement austerity measures that are very unpopular among Greeks. Experts say that in the long term an exit of Greece from the eurozone may benefit both the country and the euro, but in the short term an impact could be very negative.
EUR/USD fell from 1.2901 to 1.2866 as of 8:50 GMT today, while the intraday minimum of 1.2860 was the lowest since January 23. EUR/JPY ...
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Pound Gains, Threatens Economy of UK
The Great Britain pound rose today as the safe haven role of the currency helped it to profit from speculation that Greece may leave the eurozone. The strength of the sterling caused worries that it may hurt the UK economy.
The pound gains appeal as the Swiss franc loses it due to the euro-peg. Economists are worried, though, that a strong currency may harm efforts to bring the United Kingdom out of recession. Ian Stannard, the head of European currency strategy at Morgan Stanley, explained:
The U.K. economic backdrop may not be brilliant, but it’s enjoying a haven status because of the political uncertainty in the euro zone. The advantage of sterling over a traditional haven like the Swiss franc is that its asset market is more liquid. The downside is that the strength of the pound ...
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YouTradeFX Weekly Market Analysis : 14/05/2012
Consumer sentiment in the U.S. rose to 77.8 in May from the final April reading of 76.4, according to a report released by Reuters and the University of Michigan on Friday. While, the Labor Department said on Friday that its producer price index fell by 0.2 percent in April. According to Bloomberg news, Sales at U.S. retailers probably slowed in April as the weather turned more seasonable and consumers took a breather following a pre-Easter holiday buying spree, economists said before a report this week. The projected 0.2 percent gain in purchases would follow a 0.8 percent advance in March, according to the median forecast of 68 economists surveyed by Bloomberg News ahead of Commerce Department figures on May 15. Events in the U.S, likely to affect the markets this week are: Monday; a ...
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Dukascopy Morning Forex Overview : 14/05/2012
Fundamental Analysis
EUR
"Equity markets are driven by two things: fundamentals and sentiment."
- Lorne Baring, managing director at B Capital SA
European stocks climbed on Friday after a report showed U.S. consumer confidence increased to the highest level in four years in May.
USD
"Confidence has been boosted by lower gasoline prices."
- Paul Dales, a senior economist at Capital Economics Ltd.
U.S. consumer confidence rose by more than expected in May as consumers became more optimistic on the outlook of the country's economy.
GBP
"The April producer price data … do little overall to reduce the uncertainty as to whether or not the Bank of England will eventually do more Quantitative Easing."
- Howard Archer, an economist at HIS Global Insight
U.K. producer prices rose by more than ...
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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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