Foreign Currency To Defend

Fundamental Analysis EUR "Technically, easier monetary policy conditions should be currency negative." - Jane Foley, analyst at Rabobank The European Central Bank held key rate at 1 per cent on Thursday and told it expects a gradual economic recovery this year. USD "Labor market conditions have improved in recent months." - Federal Open Market Committee The number of Americans claiming for unemployment benefits tumbled to 365,000 in the week ended April 28 from 392,000 the week before, said the Department of Labor on Thursday. GBP "The service sector started the second quarter on a weaker note than in the first quarter, but continued to grow at a reasonable pace." - Chris Williamson, chief economist at Markit U.K. service sector growth slowed in April, Markit Economics data showed on ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD Currency markets were mostly indecisive during the Asia session despite the brief episode of dollar buying when Richmond Fed President Lacker explained why he dissented again at Tuesday’s FOMC. Even before this, Lacker had revealed his preference for a rate hike in 2013, but this time the FX reaction was more apparent. We see this as a sign that Fed policymaking has overtaken Greece-related issues, and now occupies centre stage in the minds of investors. As a result, the behaviour of US yields seems likely to become an increasingly important driver of FX markets. Oil continues to exert a secondary influence. Newswires reported that discussions are underway to release crude from the strategic oil reserves of developed economies, but that ...

Brazilian President Dilma Rousseff slammed rich nations on Thursday for unleashing a "tsunami" of cheap money that was "cannibalizing" poorer countries such as her own, forcing them to act to protect struggling local industries. Rousseff's words amounted to some of the highest-profile criticism to date of efforts by the European Central Bank, the Bank of Japan and others to spur their economies through low interest rates and cheap loans. Without naming specific countries, Rousseff said these measures have damaged emerging-market nations such as Brazil by unleashing a wave of capital inflows. That has made their currencies overvalued and their exports more expensive. Her speech, to construction executives, came hours after Brazil announced the extension of a tax on foreign loans. The ...

The euro leaped to its highest level against the dollar in 10 weeks and to its strongest since November versus the yen on Thursday as better-than-expected German data offset a dour economic forecast from the European Commission. The single currency retreated from highs after the EU's executive said the euro zone economy is heading into its second recession in just three years and the wider European Union will stagnate, warning that the currency area has yet to break its vicious cycle of debt. Optimistic news about Germany, however, ultimately had investors favoring the euro. "We're clearly in a bit of a risk-on mode following the strong German data and that should remain the main driver of activity," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) USD The euro is trading on a firm note as markets are somewhat more optimistic that several outstanding issues on Greece are close to resolution. Firstly, late into the session on Tuesday a Greek government spokesperson finally announced that political leaders would meet on Wednesday to respond to the bailout proposals by noon. It appears that a tentative deal has been secured with the troika, though some individual points on how the cuts are going to be achieved remain outstanding. More importantly, press reports suggest that the ECB is close to agreeing terms on participating in the Greek debt swap. The Wall Street Journal reported that the central bank will swap its holdings at purchase cost with the EFSF, so it won’t take a loose. Crucially, ...

(Reuters) - The euro rallied across the board on Tuesday, hitting an eight-week high against the dollar on optimism that Greece is about to agree on a bailout deal that will enable it to avoid a messy default. A Greek official's statement suggested that the Greek government has completed negotiations with lenders on its 130 billion-euro rescue package, although agreeing to the painful austerity measures that come with the bailout could be a challenge. Greek political leaders had balked at the austerity plan required to receive the rescue funds. But a firm deal appears to be in the works even though Greek political leaders postponed a meeting on a bailout package until Wednesday. For Greece, failure to secure the 130 billion euro ($170 billion) rescue would mean it faces a messy debt ...

(Reuters) - The euro gained across the board, hitting eight-week highs against the dollar on Tuesday, after a Greek official said the government is drafting an agreement on a bailout deal that will be put before political leaders for approval later in the day. The official's statement suggested that the Greek government has completed negotiations with lenders on its 130 billion-euro rescue package, although agreeing to the painful austerity measures that come with the bailout could be a challenge. Greek political leaders had balked at the austerity plan required to receive the rescue funds. "The market is expecting a Greek deal, so there's greater optimism overall. That drove the euro to several key technical levels," said Greg Moore, currency strategist, at TD Securities in Toronto. " ...

(Reuters) - The euro slipped against the dollar on Tuesday but stayed within its recent range as investors waited to see whether Greece will agree to painful austerity measures that are crucial for a rescue package to avoid a messy debt default. Optimism over Greece waned during the European session, dragging stocks and risk-sensitive currencies including the Australian dollar down from their highs. For Greece, failure to secure the 130 billion euro ($170 billion) rescue would mean it faces a messy debt default and destabilize the entire euro zone. "Clearly the tail-risk at this time is that developments in Greece lead to a disorderly situation and a sharp move lower in the euro," said Lee Hardman, currency strategist at BTM-UFJ. Citi's chief economist Willem Buiter raised the estimate ...

The euro surrendered all gains and traded lower against the dollar on Tuesday as expectations evaporated that a Greek debt restructuring deal could be close, while a resurgent yen raised concern Japanese authorities could intervene to weaken it. The dollar fell to its lowest level against the yen since the last intervention in October, under pressure after the U.S. Federal Reserve said last week it was likely to keep interest rates near zero until late 2014. Mounting concerns that Portugal could follow Greece in needing a second bailout and debt restructuring began to undermine sentiment on the euro even before it hit a session low against the dollar. Those concerns persisted even though European Union leaders reached an agreement on Monday on the introduction of a permanent euro zone ...