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EU unable to reach agreement for Greek rescue

US Dollar:  

Trading in the US currency was relatively light yesterday with dollar selling coming to halt during morning trade as EURUSD pared its losses from 1.3740 down to 1.3670 and cable dropped down to 1.5050 from a high of 1.5190, although this was primarily a Sterling based move which I have discussed below. Key players are awaiting interest decisions from both the FED and the BOJ tonight. The FED are widely expected to keep rates on hold but the language used in the policy statement will be closely watched for clues to the future path of US interest rates. With the US showing positive signs of growth and employment figure starting to stabi¬lize, the US are widely expected to be the first of G7 nations to raise interest rates which should give support to the USD. The risk to the dollar is if the market prices in a more aggressive monetary tightening policy by the FED and this doesn't materialise causing traders to unwind some of the dollar bets. FED decision is due at  
7 PM GMT today.
DATA—FOMC Interest rate decision, Housing Starts MoM (FEB)

Pound:

Sterling didn't have great day yesterday falling foul of comments by BOE’s Kate Barker. Barker, the longest serving independent member of the Bank of England's Monetary Policy Committee, stated that she thought a “full blown "double-dip" recession was unlikely. It's possible we will have a quarter when GDP falls, but I don't think it will be a double-dip. I would be surprised if we go back to recession but I think recovery will be bumpy and fragile." A second blow arrived with the release of a report by Moody's, the credit ratings agency that said Britain is closer to losing its AAA status. The warnings came amid evidence that the housing market was stagnating and with this, Sterling fell sharply during morning trade, losing nearly 2 cents against the US Dollar from a morning high of 1.5190 to a low of 1.5120 before closing at 1.5050. A fresh round of selling has begun this morning with a low 1.4977 registering although we have now rebounded back above psychological support at 1.50. GBPEUR has also suffered, falling as low as 1.0960 yesterday and is currently trading at 1.10. With no data due for release today, Sterling traders will be hoping for a positive report from the Bank of England tomor¬row to save their bacon.
DATA—No Data Scheduled for release.

Euro:  

Hopes for final settlement to the Greek sovereign debt crisis were not high yesterday as the EU started a two day meeting to draw a line underneath the matter and restore some faith in the single currency. Traders were not surprised to learn that Germany and France clashed as the German finance minister called for coun-tries that fail to meet strict EU guidelines be chucked out of the dingle currency, a comment we find very aggres¬sive as this would be difficult to do in theory and extremely difficult to do in practice. As the inability of the coun¬tries to reach a workable solution became apparent the single currency slipped from its high against the Dollar and dropped 2 cents against the JPY to 123.20. The only currency it faired well against was Sterling which it managed a small gain due to the UK’s problems being highlighted.
DATA—FRA CPI MoM/YoY (FEB), ITL CPI MoM/YoY (FEB), EUR CPI MoM/YoY (FEB), GER ZEW Survey

General:

• Junk bond market could cause widespread disruption to credit markets in 2012. Approx $700 Billion is due to be refinanced and with corporate balance sheets already stretched and the sovereign debt mar¬kets in turmoil, any defaults could cause a huge wave a bankruptcies.

 

 

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GBP/USD 1.5040
GBP/EUR 1.0996
EUR/USD 1.3675
GBP/JPY 136.08
GBP/AUD 1.6425
GBP/NZD 2.1370
GBP/ZAR 11.13
GBP/CHF 1.5955
GBP/CAD 1.5312
GBP/SGD 2.1012
GBP/THB 48.525
GBP/HKD 11.67 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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