ECB Keeps Rates on Hold, U.K. Services Disappoint
• Greece Fuels Fears of Contagion in U.S.– Wall Street Journal
• Greek Lawmakers Begin Austerity Debate – Wall Street Journal
• Sovereign Debt Fears Push Euro Lower - Financial Times
• Weber Draws Battle Lines as Greek Contagion Pressures ECB to Defend Euro - Bloomberg
• Spain Pays Highest Yield Since 2008 in $3 Billion Five-Year Bond Auction - Bloomberg
EUR/USD – Looking at the economic docket from the Euro-Zone, Germany factory orders jumped an annualized 26.1% in March to mark the highest reading since records began in 1992, while the European Central Bank kept interest rates at 1.00%. Nevertheless, EU’s Rehn said that the Greek crisis “has to do with the euro-zone as a whole,” and went onto say that policy makers must “stop that fire so it won’t spread to other countries as well.” However, it may be too late to stop the crisis from spreading as Portugal already has a high budget deficit, while Italy is heavily indebted, and Spain seems unable to restructure its economy as the country’s unemployment for the first quarter rose to 20.06%. Looking ahead, the euro is likely to remain under pressure as fears of Greek contagion linger. To discuss and other topics, please visit the EUR/USD forum.
GBP/USD – PMI Services in the U.K. unexpectedly slowed in April as Iceland’s volcanic ash grounded planes across Europe, while the general election weighed on output. The gauge of the region’s service sector decline to 55.3 from 56.5 in March, while economists were expecting the reading to advance to 57.0. The reading shows a weakening outlook for growth in the U.K. as orders for materials scale back, while the future outlook is less favorable as the country battles its debt crisis which currently in the spotlight amid Greek contagion fears. Meanwhile, the region’s official reserves jumped to $561 million in April to mark the highest reading since November 2009. Going into the highly anticipated election, votes may show that no parliamentary majority for the first time since 1974 as David Cameron and Gordon Brown may have their fate left up to liberal democrats. To discuss and other topics, please visit the EUR/USD forum.
Written by Michael Wright
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.