We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Mixed
More View more
Real Time News
  • The $USD may rise with USD/IDR, USD/SGD, USD/PHP and USD/MYR as #coronavirus contagion fears hurt emerging markets. The Fed and its repo operations will be closely watched. Get your market update from @ddubrovskyFX here: https://t.co/rPnwmsMlPn https://t.co/1zD4dRlcmK
  • My majors-based #JPY index (average #Yen value vs #USD, #AUD, #GBP and #EUR) continues its upside breakout through falling resistance from September. Early 2020 highs stand in the way as the key upper psychological barrier which if taken out, may spell medium-term Yen gains https://t.co/RXYREqI5wz
  • 🇦🇺 AUD NAB Business Confidence (DEC), Actual: -2 Expected: N/A Previous: 0 https://www.dailyfx.com/economic-calendar#2020-01-28
  • The #Yen is aiming higher amid worries about the economic impact of a #coronavirus outbreak. The #Euro is up after a regional election in Italy bolstered the government. Get your market update from @IlyaSpivak here: https://t.co/WnAyoQrvby https://t.co/OqsqCK7Wjn
  • RT @FirstSquawk: S.Korea Fin Min: Virus Outbreak May Impact S.Korea Exports, Economic Growth
  • ❗ Will be moving this week's session on IG Client Sentiment forward by one day to 1:00 GMT Thursday (instead of Wednesday) where I will be discussing trader positioning impacting market trends after the #Fed rate decision. Signup for this session here - https://www.dailyfx.com/webinars/998956395?CHID=9&QPID=917702
  • ❗ Heads Up ❗ I will be covering Australian CPI data tomorrow at 00:15 GMT Wednesday to discuss the Australian Dollar outlook. Signup for the session below! $AUDUSD $AUDJPY $AUDNZD $AUDCAD - https://t.co/8mYk6iDV3g
  • The Australian Dollar fell as the US Dollar and Japanese Yen rose, pushing $AUDUSD and $AUDJPY to deepening bearish technical breakouts as #coronavirus fears engulfed financial markets #AUD #USD #JPY - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/01/28/Australian-Dollar-Forecast-May-Deepen-Bearish-AUDUSD-AUDJPY-Fall.html?CHID=9&QPID=917702 https://t.co/toaVPNHih5
  • Heads Up:🇦🇺 AUD NAB Business Confidence (DEC) due at 00:30 GMT (15min), Actual: N/A Expected: N/A Previous: 0 https://www.dailyfx.com/economic-calendar#2020-01-28
  • Join @IlyaSpivak 's #webinar at 8:00 PM ET/1:00 AM GMT to prepare for the week ahead in trading $AUDUSD Register here: https://t.co/sZNWPVRHA0 https://t.co/mtlf2M7bZr
Euro Extends Two Day Nose Dive Amid Greek Debt Contagion Fears, British Pound Halts Three Day Decline

Euro Extends Two Day Nose Dive Amid Greek Debt Contagion Fears, British Pound Halts Three Day Decline

2010-05-05 10:31:00
Michael Wright, Currency Analyst
Share:

Talking Points
•    Japanese Yen: Strengthens Across the Board
•    Pound: Weakens Against All Major Currencies 
•    Euro: Continues Southern Journey Amid Debt Crisis
•    U.S. Dollar: MBA Mortgage Applications, ISM Non-Manf. On Tap

Euro Extends Two Day Nose Dive Amid Greek Debt Contagion Fears, British Pound Halts Three Day Decline


Indeed, the southern journey maybe far from over as traders speculate that the $143 billion life line awarded to Greece will need to be extended to both Portugal and Spain. Looking at the equities market, U.S. futures are foreshadowing a lower open into the North American trade following yesterday’s biggest drop in global equities in approximately three months. Some traders may ask, exactly why all the uproar of Greece contagion to its euro-zone members? Some concerns that have arose are that Portugal is chronically uncompetitive and has a high budget deficit, Italy is heavily indebted, and Spain seems unable to restructure its economy, with the country posting the highest unemployment rate in the Euro-zone at 20.05% in the first quarter. Thus, these troublesome conditions in the sovereign countries amid policy maker’s comments are undeniably overshadowing what seems to be a positive economic calendar.

Overnight, European Central Bank council member Axel Weber said that the European rescued package for Greece is the best way to avoid contagion, and went onto add that Greece’s situation is not comparable with other states. At the same time, he announced that “there is a threat of grave contagion effects for other member states in the monetary union and increasing negative feedback loop effects on capital markets,” during his statement today before German lawmakers in Berlin vote on a rescue for Greece. Furthermore, Weber publicized that Greek insolvency would have Lehman-like effects and “dramatic consequences.” Moreover, European Union Economic and Monetary Affairs Commissioner Olli Rehn announced that he expects Italy to “intensify” work on fiscal consolidation as the country has “limited fiscal space.” Nevertheless, the economic docket was fairly quiet overnight as final PMI services and composite readings were all virtually in line with expectations. Euro-Zone retail sales in March retreated an annualized 0.1% after falling 0.2% the previous month as figures showed that was reading was slightly better than economist’s expectations of -0.5%. On the positive side, the EU lowered the euro-area 2010 deficit forecast to 6.6% from 6.9%, and raised the euro-area 2010 GDP growth forecast to 0.9% versus 0.7%.

The British pound halted a three day decline to reach an overnight high of 1.5175 ahead of tomorrow’s election as market participants see a risk for a hung parliament following former British finance minister Nigel Lawson stating that “the prospect of a hung parliament is already priced into the markets” last Friday. Meanwhile, EU’s Rehn said that the U.K. government should address debt level and agree on a fiscal consolidation program. Taking a look at the economic docket overnight, the BRC index in April jumped 2.0% after climbing 1.2% the previous month, while construction in the U.K. expanded at the fastest pace since September 2007. The gauge of building activity rose to 58.2 from 53.1 in March on the back of increased demand for homes and commercial property.

The Greenback was up against most major currencies expect for the British pound as risk appetite picked up from where it left off yesterday. The U.S. dollar is likely to gain momentum going into the U.S. trade as the world’s largest economy is expected to show that the ADP employment change for the month of February jumped 30K, while the ISM non-manufacturing composite index rose to 56.0 in April from 55.4 in March. MBA mortgage applications and challenger job cuts are also on tap.

Do You Expect the EUR/USD to Maintain Its Current Range Over the Following Month? Join us in the Forum

Related Articles: 

Forex Weekly Trading Forecast – 05.03.10


To discuss this report contact Michael Wright, Currency Analyst: instructor@dailyfx.com

mb05.05

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.