Analitics
While headlines focus on the EU, the real story is the JPY
The USD was stronger across all of the G10 today with exception to the JPY as risk deteriorated early on and could not recover later in the day. Sentiment started off in the doldrums when Spain formally requested aid for their troubled banking sector and the negative headlines just kept on coming. Fitch downgraded Cyprus to junk status, with a negative outlook and then news hit that the Troika’s decision making process in Greece may take longer than anticipated
Source: Forex.com
25.06.2012
Will Germany succeed in kicking Greece out of the Euros?
After voting in a pro-bailout party to government, which gives the Greeks a chance to stay in the Eurozone, it seems to be one nil to Germany as we lead up to the much-anticipated Euro 2012 quarter final match in Ukraine this evening. However could the Greeks pull off a coup and beat their Eurozone masters in a penalty shoot-out? Unfortunately for the Greeks anyone’s chances against Germany in a penalty situation are bad. Unless a Hellenic miracle occurs on the pitch Greece is probably more likely to stay in the currency bloc than beat Germany in tonight’s game.
Source: Forex.com
22.06.2012
Fed extends Twist, no QE3
The buck firmed after the FOMC revised lower its outlook for the economy and disappointed investors that were looking for another round of asset purchases. The Fed did extend its Operation Twist program through the end of the year with $267B of Treasuries to be swapped by the end of 2012 with the intent of pushing down longer term borrowing costs. At the following press conference, Chairman Ben Bernanke left the door open for QE3 as he said that the Fed would consider further asset purchases. He highlighted the fact that safe haven flows have been pushing down interest rates and added that the Fed “can lower interest rates more”. Treasury yields1 are mostly higher today with the exception of the long term 30-year yield which is currently lower by 2.2bps.
Source: Forex.com
21.06.2012
Local data gives way to positioning ahead of tonight’s FOMC meeting
USD lost ground early in the session as investors became wary price action overnight overextended itself on hopes of more QE. But the pull-back in sentiment was not sufficient enough to erase all of the gains at the market open for Asian equities. Price action through the session was fairly lacklustre, with almost all local data being largely ignored in the face of the FOMC meeting tonight. Action in the FX market over the last few days suggests investors are counting on the Fed to expand its balance sheet.
Source: Forex.com
20.06.2012
Spain chooses a bad day to bury bad news
It has been an unsettled morning to say the least. After a fairly calm Asia session it looked like the markets would consolidate into the Fed meeting, which concludes tomorrow. But within a few hours it became clear: Europe is still dominating sentiment. News that the release of the audit on Spanish banks (billed as the final, all-encompassing view of the bad debts on Spain’s banks’ balance sheets) would be delayed until September rocked risk markets. In the current environment this is being viewed as negative and a sign that Spain has something to hide (i.e., more bad debts than we currently think).
Source: Forex.com
19.06.2012
Few hints from the RBA
The release of the RBA’s June meeting minutes was the highlight of the session, as it momentarily turned investor attention away from the European debt crisis. However, the response from the market was limited and short lived. AUDUSD monetarily jumped higher, but the somewhat ambiguous nature of the minutes brought the pair back down.
Source: Forex.com
18.06.2012
Greek election fever dominates
There is one thing on the markets’ minds and one thing on global policy makers’ minds at the moment: will Greece manage to stay in the Eurozone? With two days until Sunday’s elections we have heard that the Bank of England will take action to try and cushion the economy from an implosion in the Eurozone, the Bank of Japan governor also came out this morning and said that Europe is the biggest risk to the Japanese economy and a strong yen could hurt exporters. It seems the only bank not willing to provide more support is the one bank that is considered part of the solution to this crisis, the ECB.
Source: Forex.com
15.06.2012
Spanish yields surge…
Spanish bond yields have surged to their highest ever euro-era levels, reinforcing the fact that bailouts have not helped to alleviate credit risk in the currency bloc. Below are a few of my thoughts about today’s market action. I have been doing media commitments all morning, so here are some initial thoughts, I will write in more detail later.
Source: Forex.com
14.06.2012
Why are the markets so sanguine?
This time two years ago if Spain’s bond yields had risen to a record euro-era high then we may have seen EURUSD tumble sharply, potentially even below the 1.18 level reached in June 2010. However, Spain’s bond yields surged above 6.8% (perilously close to the 7% level that triggered bailouts for Greece, Ireland and Portugal) and yet EURUSD is actually recovering after dipping below 1.2450 on Monday.
Source: Forex.com
13.06.2012
Dollar softer as sentiment stabilizes
USD is trading softer against the majors (except for the JPY) as sentiment stabilizes. Global equities are trading mixed, US stock futures are currently in positive territory, and Treasury yields are higher across the curve with 10-year yields currently up 3bps to 1.616%. Concerns about the Spanish bank bailout are being eased somewhat as the ISDA announced that the proposal is not likely to trigger a credit event due to subordination while S&P indicated that Spain’s rating remains intact as the government’s debt will rise to just over 80% of GDP if all of the proposed €100B were to be utilized. The May import price index fell by the most since June 2010 with a -1.0% monthly decline in May (prior 0.0%). Due out at 1000ET is the IBD/TIPP economic optimism reading for June.
Source: Forex.com
12.06.2012
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