Forex Focus is brought to you by IG Markets - Forex Trading
HISTORICAL DETAILS
% Change
1 Wk -2.19
1 Month -2.83%
3 Months -3.33%
6 Months 6.66%
1 Year 11.19%
52 WEEK
High 1.4940
Low 1.2523
BLOOMBERG MEDIAN FORECASTS
Q2 2011 1.45
Q3 2011 1.44
Q4 2011 1.41
Q1 2012 1.41
DAILY DETAIL
Overnight, EUR/USD was thrown around by speculation and rumour, with the pair collapsing to 1.3837 before rebounding to an overnight high of 1.4062. This occurred around hearsay that the ECB was in the market buying Spanish and Italian bonds, in turn causing a huge short covering rally. Late in US trade, the euro took a fresh blow as Moody’s downgraded Ireland’s debt to Ba1, or junk status, citing concerns that there could be further pressure on the sovereign from a disorderly default. However, Asian traders looked through the downgrade, suggesting that while it is undoubtedly negative, Ireland’s debt (with such elevated yields) is already trading at junk status. It seems participants are insinuating that the fears over Italy are perhaps overplayed. With the Italian press reporting that the deadline for their budget vote will be Friday (previously July 17), many are suggesting the measure will pass smoothly, which is creating some positive sentiment towards the single currency. We feel Italy is in a much different space than Greece, Portugal and Ireland, as they have a strong housing market and private sector debt, especially in households that are classified low by European standards. In theory, the fears over bond yields spiking up to similar levels as periphery Europe is overdone should become attractive to certain bond funds around 6% (ten-year bonds). The dovish stance from the FOMC should also create some positive sentiment towards EUR/USD, so a move to 1.4050 cannot be ruled out. Chris Weston, Australia
No comments:
Post a Comment