Euro Humbled by True Finns and Debt

The EUR/USD put 1.4500 in the rearview mirror to begin the week as sovereign debt fears coupled with the outcome of a Finnish parliamentary election dropped the pair off of recent fifteen month highs. Elections in Finland saw the anti-euro True Finns party gain over 19% of the vote, prompting many to wonder if any new bailout plans for Portugal will be held up by Finnish voting. Finland has a unique right to cast their vote on any Euro Zone request for a member nation’s bailout. This did not bode well against a backdrop of rising costs to insure Greece’s EU/IMF debt, of which almost 60% of investors believe will be defaulted upon by Greece within five years.

The EUR/USD gapped lower by almost 20 pips on the open to 1.4410 and eventually found support near 1.4350 as the bears swept into the markets to sell the single European currency. The drop in the EUR/JPY was a bit more dramatic, as the pair shed close to a big figure to touch an almost two week low right near 134.90. The story was similar for other Euro based pairs as well, with EUR/CHF seeing 1.2840, and EUR/AUD registering sub 1.3600 prices for the first time in 10 days. With the weakening Euro, the yen and US Dollar both saw rare advances in Asia. USD/JPY looked to be well supported by the 82.85 level after a descent from 83.25 highs earlier in the day.

The other event of the session came from New Zealand, where an early skirmish above 0.8000 was rebuffed in the NZD/USD and subsequent poor CPI data, (0.8% versus 1.0%) pulled the pair to lows under 0.7920. Conversely, AUD/NZD shot from 1.3190 to eventual highs over 1.3305 due to the softer Kiwi dollar. Tomorrow’s monetary policy minutes out of the RBA may also help propel these currencies with the only top tier data release due out in Asia on Tuesday.

Source: Forex.com

18.04.2011