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US dollar bounces back as Dow Jones sells off

The Euro fell sharply against the US Dollar for the first Friday in four, sunk by news that Norway sus¬pended financial aid to Greece and aggressive debt downgrades from Fitch. The Norwegian government cited Greece’s failure to comply with agreed-upon conditions to aid in withholding a $42 million grant from the debt-stricken country. The move was largely symbolic given that it represents such a relatively small proportion of fiscal aid, but traders speculated that growing discontent with Greek debt troubles could push Finland to do the same. Further compounding worries, Fitch ratings downgraded Greece’s long-term rating to B-plus from BB-plus and warned that continued downgrades were likely if the EU and IMF did not produce a credible plan to resolve the country’s debt crisis. Developments were enough to push Greek government bond yields to further usurious highs, and the spread against the benchmark German Bund likewise hit record size. Focus remains on whether Greece will need to restructure its debt and/or whether a fresh wave of EU bailouts is likely. It will be critical to watch official commentary through the coming week and, in the shorter-term, European Purchasing Managers Index figures due today. S&P downgrades outlook for Italy from stable to negative.
DATA : No major data to be released today.


The US Dollar was firmer at the close of trade Friday as stocks slumped and commodities advanced across the board. With no economic data of note, the dollar remained range bound throughout the session. Concerns over the sovereign debt crisis in Europe once again made headlines after ECB officials cited they will not accept Greek debt as collateral if the nation were to restructure. Consequently, the euro snapped a 5-day advance, giving lift to the dollar and the Swissie as traders squared risk positions ahead of the weekend. Look¬ing ahead, the dollar may continue to benefit from weakness in the euro as sentiment sways against the 16-nation bloc. Although the Dow Jones FXCM Dollar Index remained above key support at 9600, it has maintained a descending channel dating back to the start of the week. Economic data picks up again on Tuesday when traders get another update on the housing market with the April new homes sales data, and the Richmond Fed manufacturing index.
DATA : No major data to be released today.

The Australian Dollar bounced off of noteworthy intraday lows on a bounce in gold prices, keeping the AUDUSD’s correlation to commodity prices strongly intact. The high-yielding antipodean currency had initially fallen to the bottom of its multi-day range on sell-offs in ‘risk’. Yet gold spot prices lent a hand in breaking above a closely-watched consolidative range, and short-term risks arguably remain weighed to the topside.



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GBP/USD 1.6174
GBP/EUR 1.1518
EUR/USD 1.4035
GBP/JPY 131.97


GBP/NZD 2.0500
GBP/ZAR 11.2846


GBP/CAD 1.5811
GBP/SGD 2.0169


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These rates are for indication purposes only.

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John Paul Georgiou

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