Key Overnight Developments
• Euro drops below 1.3000 for first time since April 2009
• Australian Building approvals beat expectations
The Euro continued to get beaten down throughout the Asian session, the Pound
was relatively unmoved ahead of the UK elections.
Asia Session Highlights
continues to reign supreme as fears of the Greek contagion spreading
and a slowdown in global recovery continue to roil the markets. Eur/Usd hit a fresh 1-year low of 1.2936
on selling pressures and Usd/Jpy
which rose to a high of 94.92 was still unable to break through barriers at 95.00. IMF head Strauss-Kahn
said overnight that he can see the debt crisis spreading through Europe and the eventual breaking up of the euro-area if some of the small nations leave.
The key release came from Australia which showed that March building approvals
continued to surge by 15.3% vs. a forecast of 1.0% and the AIG PSI index
rose 3.4 points over April despite the strong data the Aud
was under relative pressure as broader themes dominated trade.
The Pound was relatively unmoved and remarkably held up well against the surging Usd
after hitting a 1.5090 low, support from the 1.5100 level was reinstated and the Gbp/Usd
pair has held above this level for most of Asian trade. Many speculators expected the Pound to come under immense pressure on the eve of the UK election
, however, it seems the UK’s position outside the EMU is now working to its credit. The Pound was also aided by a Telegraph article
reporting the Cameron could make a deal with Unionists making him PM.
Euro Session: What to Expect
German and EMU PMI’s are due early in the session both of which are expected to show a flat reading from February. Even if these do show a better than expected reading investors are likely to put aside economic data and corporate earnings as they focus solely on the debt crisis
. A worse than expected figure will provide further reasoning for selling the euro. Commodities
will likely continue to be under pressure as all non-USD assets are shunned
backing off its 5-month high of $1,192 and oil
losing 4% yesterday.
Even though the Spanish PM dismissed the rumour that they will request Eur260 billion in aid as “complete madness” players will likely focus on the Mediterranean strip and continue to demand higher yields to buy and insure their debt.
Later in the session US ISM non-manufacturing and ADP employment will distract investors, though a stronger reading in either is likely only to fuel further USD buying. The dollar at present benefitting from both sides of risk, climbing in a risk averse climate on safe haven buying and when risk is on players focus on strong economic data out of the US and see possible interest rate hikes on the horizon.