Morning Briefing
The Morning Briefing is prepared daily at the start of the European Trading session by RTFX’s trading desk. It presents a roundup of the major news headlines occurring within the global economy that may affect the forex market. This news bulletin also includes a view of our forex calendar for the day, highs and lows achieved in the previous sessions from the forex market, global indices and commodities and brief commentary about the economic headlines.
Morning Briefing for Monday, 21 May 2012 (Updated 09:23:15 CET)No News is Good News, or?
What’s new:
Asia: Awaiting news from Greece and potential spill-over effects. JPY offered on speculation that BoJ will add stimulus to boost growth.
United States: Risk aversion moved flow from stocks to treasuries. 10yr generic fixed income futures in all-time highs at 133-27. USD weak on Friday.
G8: Another round of talk, but no action on Greece.
Europe: Slightly negative across the board in stocks. Only Spain managed to recover some of the losses, closing up 0.4%. EUR/USD re-visiting 1.28+ this morning.
Rates in Asia and Indices:
Low High Change
EUR/USD 1.2742 1.2813 -0.04 %
USD/CHF 0.9375 0.9422 -0.07 %
GBP/USD 1.5795 1.5839 -0.02 %
USD/JPY 79.03 79.31 -0.34 %
EUR/CHF 1.2010 1.2014 -0.01 %
EUR/JPY 100.55 101.42 -0.30 %
Dow Jones 12336.76 12492.97 -0.58 %
Nasdaq 2474.7 2523.15 -1.21 %
S&P 500 1291.98 1312.24 -0.73 %
Nikkei 225 8608.62 8676.2 0.26 %
Shanghai 2330.325 2360.386 0.13 %
Gold spot 1591.33 1599.21 0.21 %
Oil Future 90.84 92.04 0.25 %
Comments:
EUR/USD managed a decent rally on Friday and recovered some of the losses as market participants pushed treasury futures to new all-time highs and a new all-time low in 10yr rates. Escalating concerns over Europe in addition to a struggling global economy have encouraged investors, institutions and governments alike to move a portion of their investment dollars to the relative safety of the US.
EUR/USD then managed to stay away from key support at 1.2625 which, if broken, could take us down to 1.25 (which is the current level of the real fundamental value according to the purchasing power parity. Resistance at 1.2830.
Greece is still in a massive turmoil and market participants are beginning to factor in the risk of Greece leaving the Euro zone. Over the weekend, the G8 leaders concluded their meeting voicing that they wanted Greece to stay in the Euro zone balancing growth and austerity. However, they did not provide any solution to how this could be done. Unfortunately another round of talk and no action from the G8. Concern Greece will exit the euro erased almost $4 trillion from global stock markets this month.
Overnight, the Asian stocks traded mostly in positive as speculative traders added bets towards the BoJ and the PBOC will take action in order to improve growth. BoJ to initiate two-day meeting tomorrow and Wen Jinbao, which is the Premier of China, voiced a need for action to bolster growth in the world’s second largest economy.
There is no economic news of real significance today, but markets will look for headlines related to Greece. The weekly calendar is pretty packed with important UK data though, including the CPI, retail sales and GDP. In addition the BoE minutes will be released on Wednesday. EUR/GBP managed a decent recovery from the lows at 0.7950 and is now in range of 0.81. Downside pressure is still intense though and should data be better than expectations we could see a re-test of the lows.
Have a nice day!
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