Greek default concerns weigh on the euro

The euro continued to tumble and safe havens gained with the USD stronger against its G10 counterparts with the exception of the JPY which also firmed on haven flows. EUR/USD fell to its lowest since February and EUR/JPY dropped to the lowest level since 2001 as the European debt crisis was escalated by reports that German officials are preparing for the scenario of a possible Greek default. Despite new austerity measures by Greece to cut state wages and increase tax revenue, Greek 10-year yield spreads continued to widen to record levels with the Greek yields at record highs while the German 10-year yields fell to record lows of around 1.71%. Credit default swaps in France, Belgium, Italy and Spain rose to records highlighting the market’s increasing concern of the situation in Europe. The dovish tone recently taken by the ECB and governance concerns following Juergen Stark’s resignation from the ECB Executive Council added to pressures on the common currency.

The G7 meeting over the weekend lacked fresh news which was no help to risk sentiment. Global equity markets are trading notably lower with Asian indices closing deep in negative territory while European bourse are currently trading to the downside with Germany’s DAX currently lower by about -3.10%.

China’s trade balance figures released over the weekend fell by more than anticipated with the August surplus dropping to $17.76B from the previous $31.48B (exp. $24.60B). Australian July trade balance figures were released overnight and also showed a smaller than forecast surplus of 1826M (cons. 1900M prior 1817M).

There are no economic releases of note today. FOMC voting member Fisher will speak on monetary policy later today at 1600ET.

Источник: Forex.com

12.09.2011