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Dollar extends rally as investors seek safety from Greek contagion

 

US Dollar:

Another day for risk aversion as Greek debt fears rocks the markets. From the euro-region, fears that Greece’s debt crisis is spreading sent the markets into mayhem and ultimately led the euro to tumble to a fresh yearly low against the greenback. During the semi-annual report, the European Committee raised its 2010 forecast to 0.9% from 0.7% as European companies step up their output to meet reviving global demand. Dampening what seemed to be an improved outlook for the region, European Central Bank council member Axel Weber stated that “there is a threat of grave contagion effects for other member states in the monetary union and increasing negative feedback loop effects on capital markets.” At the same time, Moody’s Investors services said that it may cut Portugal’s credit rating as it sees deterioration of the country’s public finances. Through pure market mechanics, the burden that this uncertainty saddles the euro with would naturally benefit its most liquid counterpart. However, the greenback’s general appeal as a safe haven draws far more impor¬tance than its relationship to the euro.
DATA : Unemployment Claims, Fed Chairman Bernanke Speaks.     
        
 

 
Pound: 

The UK general election will also be in focus as months of speculation end with voters finally heading to the polls. A series of televised debates between the candidates for Prime Minister produced a serious con-tender in the Liberal Democrat’s Nick Clegg, meaning that displacing the broadly disliked Gordon Brown and his Labour party will not necessarily secure a majority for the top-contender Conservatives and threatening to cre¬ate the first “hung parliament” since 1974. This could prove to have dire outcome for British Pound, with inves¬tors fearful that a divided government will not have the conviction to meaningfully deal with the nation’s soaring budget deficit, a gap approaching 12 percent of GDP.
DATA : Services PMI and Parliamentary elections.
    
  

Euro:

An interest rate decision from the European Central Bank headlines the economic calendar in European hours. The outcome is unlikely to produce any significant changes with inflation well below the 2 percent target level and economic growth showing signs of slowing momentum in the first quarter. Instead, all eyes will be fo¬cused on ECB President Jean-Claude Trichet’s press conference following the announcement, with the central bank chief will sure be grilled about Greece as well as the implications of any future bailouts for monetary policy. In fact, some analysts are already suggesting that the Euro Zone may opt to inflate its way out of debt by slash¬ing borrowing costs and resorting to quantitative easing should a major member state succumb to sovereign risk concerns.
DATA : Interest rate decision, ECB Press Conference.
    
 

General:

• Australian Retail Sales disappointed in March, adding 0.3 percent from the previous month and under-performing forecasts for a 0.7 percent increase. Household appliance sales proved to be the most signifi¬cant drag on retail activity, down 1 percent from February. A separate report showed the Trade Balance deficit widened for the third consecutive month to –A$2.1 billion as overseas oil purchases pushed im¬ports to outpace the gain in overseas sales.

 

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GBP/USD 1.5051
GBP/EUR 1.1752
EUR/USD 1.2800
GBP/JPY 140.87
GBP/AUD 1.6639
GBP/NZD 2.0723
GBP/ZAR 11.5082
GBP/CHF 1.6845
GBP/CAD 1.5588
GBP/SGD 2.0992
GBP/THB 48.495
GBP/HKD 11.6887 red-down; blue-up (snap shot)

These rates are for indication purposes only.

 

For more information or to get the latest spot rates contact:

John Paul Georgiou
Senior Foreign Exchange Broker
+44 (0)20 7959 6851

\n john.georgiou@voltrexfx.com

 

 

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