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Dukascopy Afternoon Forex Overview : 07/07/2011
Previous session overview
The euro rebounded against other major currencies Thursday after European Central Bank President Jean-Claude Trichet announced the ECB's suspension of its minimum credit threshold for Portugal.
The euro pared losses and spiked higher against the dollar to trade briefly above USD1.43, while it also recovered against the franc and hit the day's highs against the yen. At 1302 GMT, the euro was trading at USD1.4281 against the dollar.
Trichet said the ECB would issue a press release on the treatment of Portuguese collateral "shortly".
He reiterated that a credit event or a selective default in the euro zone must be avoided.
New claims for unemployment benefits dropped by 14,000 to a seasonally adjusted 418,000 in the week ended July 2. The decline is bigger ...
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ECB Delivers Rate Increase in July despite Mounting Debt Problems
The European Central Bank met market expectations and fulfilled its promise with a quarter percentage point rates increase to contain inflation as the ECB assures that its mandate is to assure price stability regardless for the fiscal imbalance that is threatening the monetary union.
The Governing Council voted positively on rates taking the main refinancing rates higher by 25 bp to 1.50% from 1.25% in the second move this year after April’s first rate hike since rates were taken to their historic low of 1.0% in the financial crisis in May 2009.
The bank also raised 0.25% the marginal lending facility to 2.25% and the deposit facility to 0.75%.
Trichet delivered the promise after singling the rate hike last meeting in the press conference with “strong vigilance”. The ECB is assuring ...
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Analysis: Worries on debt ceiling bubble beneath surface
(Reuters) - As the standoff over raising the government's borrowing limit enters its final month, it's becoming harder for investors to avoid thinking the unthinkable: the world's most trusted borrower could soon renege on its debt.
The U.S. Treasury says it will be forced to default on its obligations if Congress does not raise the $14.3 trillion debt ceiling, which caps how much it can borrow, by August 2.
The Treasury has not specified which bills it wouldn't pay, but the prospect of its missing interest or principal payments on any outstanding debt is a terrifying one for Wall Street.
Even a temporary default would erode the United States' status as the world's most powerful economy and the dollar's role as the dominant global currency.
"It would be catastrophically bad to tell the ...
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Prices slip as euro zone in focus, data eyed
(Reuters) - U.S. Treasury prices fell in European trading on Thursday driven by lower German debt futures as events in the euro zone continued to dominate sentiment, though investors were increasingly looking ahead to payrolls data on Friday.
Treasury futures slipped 7/32 to 122-49/64, broadly in line with a fall in German Bund futures where anticipation of an interest rate hike by the European Central Bank weighed on demand.
"The focus continues to be on the euro zone where the ECB is set to hike rates," said Craig Collins, a trader at Bank of Montreal. "Once that's out of the way then the focus switches back to fundamentals with ADP data later in the day that gives us a peek of what to expect from tomorrow's payrolls."
The ADP private sector employment report due at 1215 GMT is ...
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ECB meets to raise rates, seen firm on Greece
(Reuters) - The European Central Bank is almost certain to raise interest rates later on Thursday and will show no let-up in its insistence that governments solve Greece's debt crisis without triggering a default credit rating.
Financial markets see a quarter-point rise in the ECB's benchmark rate to 1.50 percent as a virtual certainty after the bank's recent reiterations that it is in a mode of "strong vigilance" -- code traditionally used to signal a hike.
The ECB's Governing Council began meeting at 0700 GMT to weigh its policy options. The bank will announce its rate decision at 1145 GMT and ECB President Jean-Claude Trichet holds a news conference at 1230 GMT.
Euro zone inflation held at 2.7 percent in June, softer than expected but well above the ECB's target of just under 2 ...
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Oil rises on stock draw, bank forecasts
(Reuters) - Brent crude climbed for the third day to above $114 on Thursday, boosted by a higher-than-expected drop in U.S. crude stocks and growing investor appetite following bullish oil forecasts from major banks.
U.S. crude oil stocks fell by a more-than-expected 3.2 million barrels, according to the American Petroleum Institute ahead of a second stocks report on Thursday, tightening inventories in the top global oil consumer.
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Analysis: Gold stocks to outsparkle gold in post-QE2 world
(Reuters) - Gold's performance has eclipsed that of gold mining stocks this year, but gold equities now are likely to take the upper hand as the flow of cheap U.S. cash slows and miners boast juicy margins and good growth prospects.
Gold's status as a quasi-currency and safe haven has helped pushed the price of the metal up about 20 percent since the start of the year to above $1,520 an ounce, making it one of the top performing asset classes of 2011.
That compares with an 8 percent drop in the ARCA Gold Bugs index .HUI, which includes shares in some of the world's largest gold miners.
The U.S. Federal Reserve's $600 billion bond-buying program, which has kept down interest rates and the dollar; the disaster in Japan and the violence in the Middle East, which have shaken investor ...
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Swiss Franc Strengthens on Europe’s Woes
The Swiss franc gained against the euro as the downgrade of Portugal’s credit rating by Moody’s Investors Service spurred demand for the currency as a safe haven.
Many traders were unprepared to the sudden surge of risk aversion after the last week. It looked like the problems of Europe would go to the background for some time as Greece has “bought” some time for dealing with the debt crisis by accepting required austerity. The downgrades of European countries’ rating by rating agencies turned everything upside down and market sentiment shifted from risk appetite to risk aversion. Safe currencies, including the franc, thrive in such environment.
Yet the Swiss currency may encounter problems in Switzerland itself. The nation’s government said that the currency was in a ”phase of ...
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Bank of England Holds Rates and APF Steady Prolonging Their "Wait & See" Approach
With no surprise, the Bank of England maintained its monetary stance and kept rates and the asset purchases program steady for yet another month as policy makers continue to battle the opposing odds of high inflation and slowing growth.
The BoE Monetary Policy Committee voted today to keep the benchmark interest rate at 0.5% and also voted to maintain the stock of asset purchases finances by the issuance of central bank reserves at 200 billion pounds. The BoE extended the hold on their monetary policy for another month since it was last introduced on March 05, 2009 and the APF last increased by 25 billion in November that year.
It was nearly taken for granted that the bank will leave the policy unchanged, especially as the MPC’s stance has been trending more dovish with the spreading ...
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