Euro news:
In very volatile trading the euro is marching forward today, most notably against the Greenback, as news of a bailout and strict fiscal tightening from Greece appears to have had had the desired effect in calming the markets, for the time being.
The Euro has pushed through the $1.33 level and it appears to be holding for the time being although current trading levels are at session highs so we may see the euro come away from the $1.33 level as the U.S markets open. Greek banking stocks have been subjected to huge swings and yesterday was no different as they rallied 13%. This will be very positive news for the markets as an increase in risk appetite will hopefully drive down bond yields for Greece. “Sentiment for taking on risk seems to be prevailing, given receding worries over Greece,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This is a plus for equities and is likely to lead to selling of the yen.” All eyes will now turn to the details of the bailout in order to gauge if a) the amount is enough and b) if the proposed austerity measures can be implemented and sustained. Place your bets accordingly.
Pound news:
Having had a very poor Wednesday and Thursday, Sterling has rallied somewhat to recover against the dollar, currently trading at $1.5365. Whilst the high of the day has approached the $1.54 level it would appear that for the time being the pound does not have the momentum to reach or hold at $1.54 or above.
The reaction from last night’s debate seems to have had a positive reaction in the markets as David Cameron took the lead in marking out a path for British finances.
In a further boost for Sterling the news that a bailout for Greece as well as austerity measures relieved downward pressure as the U.K was being dragged into the eurozone debacle despite its best efforts to remain on the sidelines. Against the euro the Sterling performance was not quite so pronounced as both the euro and pound rose in tandem as market sentiment improved as a whole. Current levels are promising at €1.1549 but heading into the weekend it is unlikely we will move towards €1.16 for the time being. It is important to remember that a hung parliament is a potential outcome which the markets will be analysing closely. “The market remains concerned about a hung parliament and with Cameron looking to have come first in the last TV debate this offers a little bit of hope,” said Audrey Childe-Freeman, currency strategist at Brown Brothers Harriman.
Over the last two weeks there has been substantial movement in GBP/USD but the overall trend shows that it has been range bound, moving between $1.5290 and $1.5410 predominantly trading in the mid $1.53 levels.
US Dollar news:
The dollar opens down against both the euro and the pound as hopes of a bailout package for Greece appears to be on the horizon. The gains are minimal so far but they come as a welcome relief after some particularly heavy falls. Sterling starts this morning up on the dollar by 0.40% for the day and just shy of the day’s high of $1.5388. The march ahead continues from last night as Sterling rallied late in the day to close at $1.5329.
The euro received a huge boost from a proposed bailout as well as €24 billion of cut backs. Naturally this was well received by the markets and the dollar finds itself down by just under half a percent today, with the euro trading at $1.3291. Heading into the weekend we may see the euro touch $1.3300. Broadly speaking the U.S is benefiting from a continuous stream of positive data, most recently a raft of company earnings showed major players such as General Electric and Caterpillar Inc are reporting better sales resulting in increases staff hiring. “If you can get the focus off of Greece, the incoming economic indicators for the euro-zone actually look pretty good,” said Ray Attrill, global research director at Forecast Ltd. in Sydney. “The dollar and yen have benefited most from the loss of risk appetite, so any reversal of that and you’d expect to see the dollar and yen being the weaker currencies.”
Quote of the day
“When the world says, ‘Give up,’ / Hope whispers, ‘Try it one more time.’” – Anon
