“Europe and the members of the euro zone, are committed to a common currency and will defend it at any cost,” Greece’s Finance Minister George Papaconstantinou told reporters yesterday in Washington, following his meeting with the International Monetary Fund and World Bank. According to the Greek Prime Minister, Europe’s response to the Greek fiscal crisis shows that the bloc will do whatever is necessary to protect its unilateral currency.Greece is currently negotiating the terms of a bailout worth as much as €45 billion this year as investors continue to doubt that that the tiny Mediterranean nation can finance itself after its budget deficit totaled 13.6% of gross domestic product last year. With Greece facing €8.5 billion of bonds maturing May 19, finance ministers are seeking a swift resolution of the talks.Last Thursday, the Euro plunged to a new one year low of $1.32574 after a EuroStat report that Greece's budget deficit was larger than previously thought. Greece called for activation of the joint EU-IMF €45 billion ($60 billion) bailout fund this year in an unprecedented test of the Euro’s stability and European political cohesion. The appeal for help from the European Union and International Monetary Fund follows a rapid rise in borrowing costs to what Greek Prime Minister George Papandreou called unsustainable levels that would ruin all efforts to cut the budget deficit that is more than four times the EU limit. Greece’s request of the bailout fund comes one day after the yield on the country’s benchmark two-year note topped 11%, approaching that of Pakistan, and Moody’s Investors Service lowered Greece’s creditworthiness by one notch to A3, saying it was considering further cuts.On Friday, the single currency managed to rally against the US Dollar, as German business confidence rose more than expected to hit a two year high in April. The Germany Ifo Climate, a survey based on 7,000 executives, jumped from a revised 98.2 to 101.6 (the market had expected 98.2) as the global economic recovery boosted export demand and warmer weather allowed workers back onto construction sites. The Euro's 12% drop in the past five months has made German exports more competitive outside the currency bloc and as a result, German manufacturing is expanding at a record pace. Moreover the arrival of spring weather has significantly boosted building activity and consumer spending.Following the release of the better than expected report, the euro rose to trade at $1.3335 (at 11 a.m. in Frankfurt), up from 1.3230 that morning. Unfortunately, the Euro was unable to fully recover from Thursday's detrimental losses and fell for a second week in a row to close at $1.33837, up 0.88% from the day’s opening price but down 0.78% from the week’s opening price.
In the Asian forex online trading session this morning, the EUR/USD gained some ground as the pair hit a high of 1.33961. Analysts, predict that Euro will continue to fluctuate this week as investors await a solid plan on a financial lifeline for debt-stricken Greece. Later today, the European Central Bank president, Jean-Claude Trichet will speak (1730GMT).Across the Channel, the U.K economy grew half as much as expected in the first quarter of this year, highlighting that Britain still continues to struggle with its recovery. Britain's Prelim GDP report showed a 0.2% increase from the last quarter of 2009, when a 0.4% expansion pushed Britain out of the recession. The pound tumbled 0.4% to $1.5318 following the report, from $1.5397. The British currency managed to recovery against its U.S counterpart, to close the week at $1.53749, up 0.05% from the day’s opening price. The EUR/USD closed at 0.87027, down 0.82% from the day’s opening price of 0.86318.
EURThe Euro gained early in Tuesdays session only to give it back later on as the US markets opened and investors began taking profits and returned to the safe haven Dollar in advance of Thursday’s US stress test release and the European Central Bank’s decision on interest rates and stimulus. The past few sessions saw the Euro benefit from the positive sentiment on the street as traders took advantage of good economic news to come out from hiding behind the stalwart Dollar and Yen. However, as Thursday’s ECB meeting comes close, investors who traded the Euro in recent days are cashing in and taking cover once more. We, forex online traders can expect to see strength in the Euro should there be signs that the ECB will not adopt and aggressive policy – a topic that has been widely debated in recent weeks and seemingly dominated the market news.At 11:00PM GMT, the Euro was trading down .4% to the Yen to 131.88, down 1.1% to the Sterling to .8831, down .4% to the Canadian Dollar to 1.567, down 1.2% to the Australian Dollar to 1.7926 and flat to the Swiss Franc after an up and down session to 1.5102.USDFederal Reserve Chairman Ben Bernanke said that it was his assessment that the economy is “turning the corner” and that the US could see growth in the second half of this year. This testimony in front of the US Congress contradicted his last month’s report when he declared that it could take until mid-2010 before any growth is seen. What should have been good news was muted by jitters over the release of the stress test this coming Thursday and an announcement by President Obama that he intends to raise business taxes by 5% in the short term to help cover the ever growing national debt. It is thought that 10 of the 19 banks that submitted to the US Treasury’s stress test will have to raise additional revenue in order to remain solvent, however to what degree these companies are struggling was the source of much debate on Tuesday.At 11:20PM GMT, at broker trading boards, the US Dollar was down .7% to the Euro to 1.3315, up .22% to the Yen to 98.68, down .45% to the British Pound, down .2% to the Canadian Dollar to 1.1746, up .6% to the Swiss Franc to 1.1325, and down .8% to the New Zealand Dollar to .581.AUDThe Reserve Bank of Australia held interest rates today at 3% after the members said that signs that the recession has grown in Australia are not present and in fact, there are positives that can be interpreted as strength. The Australian Dollar has benefitted lately as investors tested their risk appetite and moved to the higher yielding Aussie Dollar in order to lock in some larger profits. At 11:40PM GMT, in addition to being up to the Euro, the Australian Dollar rose .45% to the US Dollar to .7421, up .65% to the Yen to 73.52, down .06% to the Pound to 2.034 and down .3% to the New Zealand Dollar to 1.2791.
EUR
The Euro had an up day against the Dollar and Pound in advance of the US Federal Reserve’s decision on interest rates and in response to poor unemployment data coming out of Great Britain. In what could signal a change in sentiment the European equity markets have been doing better and the fortunes of the Euro have appeared to reverse.
At 5PM GMT, the Euro was trading above the psychological $1.30 mark against the USD at 1.3151; the Euro was also up strong against the British Pound to .9389 a 1.3% rise. The Euro also rose more than ½% to the Canadian Dollar to 1.6637, up ¼ to the Yen to 128.65 and up over1% to the Australian Dollar to 1.987.
GBP
The amount of unemployed in England rose at the fastest pace ever to a pre 1997 level of over 2 million. The numbers indicated that manufacturing jobs are being lost at alarming pace, sparking fears of an export slowdown. The British government’s assertion that a lower pound will support the export/manufacturing industry is being dismissed by investors that believe that only an increase in overseas demand can help the industry. Wednesday’s numbers have given credibility to this argument as Britons working in manufacturing, the staple of the export industry, have lost their jobs that at any other point since they began recording this data.
At 5:15 GMT, the Pound was down over 1/3% to the US Dollar to 1.3997, down ¼% tot the Aussie to 2.1153, down almost 2% to the Swiss Franc to 1.6283 and down 1% exactly to the Japanese Yen to 136.96.
JPY
Fallout from the Bank of Japan’s non-move on interest rates late Tuesday was muted as the aggressive moves of other Central Banks, notably the UK and Switzerland seemed to take precedence. The Yen slowed its decent, but still was weak in Wednesdays trading session even after the BOJ declared that they will be buying Japanese Government Bonds – which are now perceived to be a non-move considering that none of other major countries are buying Japanese Debt and the BOJ buying debt of their own country is considered to be a wash.
The Yen rose ¾% to the Dollar to 97.87, rose more than 1% to the Australian Dollar to 64.56, rose .8% to the New Zealand Dollar to 51.85 and fell ¾% to the Swiss Franc to 83.97 on top of its losses to the Euro and gains against the Pound mentioned above. Get More Updates at: http://www.finexo.com/marketReview
USDThe dollar gained against the Euro and a host of other currencies on Friday in a very erratic trading session. As the vibe in the stock markets turned negative, investors returned the greenback as a safe haven. The equity markets had been sharply positive all week long, with US markets gaining roughly 9%, Forex investors had taken the opportunity to test their risk appetite, however Friday seemed to indicate a migration back to the US Dollar.The Dollar did erase early losses brought on by gains in stocks after decent economic data and hints that the US banks might not be as bad off as everyone thinks. Online Forex nalysts believe that the recent rally here for the USD against the Euro is all about the stock market. Investors are trying to gage whether or not the downslide in the economy is nearing a bottom – at this point, any good news can spur a rally. But the rallies are short lived because the sentiment is still quite negative.At Friday’s close, the Dollar was up .15% to the Euro to 1.2926, up .3% to the Japanese Yen at 97.98, and unchanged versus the Swiss Franc at 1.185. The Dollar did fall to the Aussie and Kiwi, closing down ½% to the AUD to .6579 and down nearly 1% to the NZD at .5248.
EURThe Euro ended the week with one of its best weeks since the end of 2008. Much of the gains the Euro made this week were based on investors testing their risk appetite, as stated above, however news from European Central Bank executives also played a part in the Euro’s rebound. Last week, several ECB board members declared that the crisis was being managed more aggressively and that a light at the end of the tunnel is in sight.The Euro closed up ½% to the Yen to 126.68, up .16% to the Swiss Franc to 1.5321, down .4% to the Australian Dollar at 1.9641 and down .35% to the Canadian Dollar to 1.6441.
GBPThe Sterling gained widely on Friday as investors appeared to be giving the battered UK currency a break on Friday. Much hype of the UK’s bank bailout plan and overall negative sentiment about the state of the British economy has kept the Pound down in recent weeks. As investors retreated from more risky positions on Friday they appeared to find value in the Sterling.The Pound closed up ½% to the dollar closing at 1.4 flat and up .3% to the Euro at .9231, up ¾% to the Yen at 137.18 and up ½% to the Swiss Franc to 1.6591. The Pound did fall slightly to the Canadian Dollar to 1.7803 and to the Australian Dollar to 2.1271.ChartAnalysis: USDCADThe recent inability of the USD/CAD to stay firm above the 1.30 level coupled with significant tension in the fundamentals has put pressure on the currency pair. The rising trend line looks like the next key support level below the 1.2675 line of support. Another way to play for a stronger CAD is with a CADCHF or EURCAD trade. USDCAD will need to see 1.2950 again to give bulls renewed hope here....
In the Asian forex online trading session this morning, the EUR/USD gained some ground as the pair hit a high of 1.33961. Analysts, predict that Euro will continue to fluctuate this week as investors await a solid plan on a financial lifeline for debt-stricken Greece. Later today, the European Central Bank president, Jean-Claude Trichet will speak (1730GMT).
