Analitics
More downside risk for the aussie
A meeting overnight between five party leaders in Athens yielded no breakthroughs in forming a new government. Whilst this was no surprise, the clear lack of cooperation between the various parties is very disconcerting and, accordingly, risk sold off following the meeting.
Source: Forex.com
15.05.2012
Greek impasse inspires haven demand
• USD broadly firmer as sentiment deteriorates further as Greek officials struggle to form a unity government. The political impasse is raising speculation of a potential Greek exit from the euro zone which is weighing on risk. Elsewhere, China announced a cut its reserve requirement ratio (RRR) by 50bps to 20% which did little to support risk as the move was seen as a reactive measure to the recent stream of weak data. Global equities and UST yields are broadly lower as traders continue to shift out of risky assets in search of safety and the dollar appears to be the main beneficiary.
Source: Forex.com
14.05.2012
Germany to the rescue?
This is the fifth day without a firm government in place for Greece; if a coalition is not found soon then we could be heading back to the polls, which open up the possibility of a prolonged period of Greek political instability. There was some hope this morning of the Conservatives forming a coalition with the Socialists and other moderate pro-bailout parties that would have a mandate to govern until 2014. This helped to lift the euro from its daily lows; however for a sustained rally in risk we need to get a firm commitment that a “moderate” pro-European government will take the reins of power in Athens. Unless that happens then the markets are likely to remain jittery.
Source: Forex.com
11.05.2012
More QE from the BOE?
The Bank of England concludes its May meeting today. We expect no change in interest rates or in the Bank’s GBP 325 billion of asset purchases, however this decision will be particularly close due to the continued weakness in the UK economic data and deteriorating sovereign situation in the Eurozone.
Source: Forex.com
10.05.2012
Dollar grinds higher as sentiment deteriorates
The dollar continued to grind higher against all of its major counterparts (with the exception of the JPY) as risk sentiment deteriorated further. Another day void of top tier data saw the market focus predominantly on European concerns. Political uncertainty remained high in Greece as Syriza leader Tsipras said that his party was unable to form a government. The mandate will be passed on to the Pasok party tomorrow which is led by former finance minister Venizelos.
Source: Forex.com
09.05.2012
Will EURUSD fall below 1.30?
This is the key question for currency traders right now. The fundamental back-drop looks challenging for the euro. Although the Merkel/ Hollande rift seems overdone to us, Greece is the real problem. The leader of the New Democracy party announced late last night that he had failed to form a coalition government. The baton is now passed to the leader of the radical left wing Syrizia party, which now has three days to form a government. If this fails then another round of elections is on the cards for June. However, these elections could coincide with Greece running out of money, which makes them a much riskier prospect than the elections held last weekend.
Source: Forex.com
08.05.2012
Australia’s trade balance is expected to print in deficit territory again
Price action overnight would suggest the market initially overreacted to the news out of France and Greece, but risk assets are not out of the woods yet. Whilst we did see a broad recovery across the FX and equity markets, there are still lingering risks surrounding the possibility of a Greek default and even Greece exiting the Eurozone. Yet, these are considered only remote possibilities at the moment, and there are also some supportive factors helping to bolster the euro, namely Fitch’s reaffirmation of France’s AAA rating, the lingering possibility of more easing from the Fed and the recognition that anti-austerity isn’t necessarily anti-euro.
Source: Forex.com
07.05.2012
Spain gets reality check from S&P
The last 24 hours have heaped even more pressure on Madrid. First there was Standard & Poor’s two notch rating downgrade for Spain from A to BBB+ with a negative outlook. Second, was a further deterioration in the unemployment rate in the first quarter. S&P’s rationale for the downgrade was down to 1, the possibility that the government will need to provide further fiscal support to the banking sector and 2, the deterioration in the budget deficit trajectory for 2011-2015. S&P also mentioned the significant risks to Spain’s economic growth, which could weigh on the country’s creditworthiness.
Source: Forex.com
27.04.2012
JPY advances ahead of Bank of Japan
• USD remains soft after Bernanke indicated that the door was open for more stimulus if necessary at yesterday’s press conference. Markets seemed to focus on this despite the upward revisions to the growth outlook and downward estimates of the unemployment rate this year. Weekly initial jobless claims today came in higher than consensus with a print of 388k from the prior 389k which was revised higher from 386k.
Source: Forex.com
26.04.2012
USD softer after Fed meeting
FX markets were relatively choppy and the dollar is currently softer against the majors following the FOMC announcement, updated Fed projections, and press conference. U.S. Treasury yields are mixed and 10-year yields briefly spiked above the 2.01% 100-day SMA and are currently back below the pivotal level.
Source: Forex.com
25.04.2012
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