Daily FX Market Outlook by AceTrader-31-5-2011

Market Review – 30/05/2011 19:43 GMT

The single currency eases on Monday due to worries over next IMF/EU aid payment for Greece

Euro traded with a soft bias in thin market condition on Monday due to holiday in the United Kingdom and United States, however, uncertainty over next aid payment by IMF/EU to Greece after weekly German magazine Der Spiegel reported that Greece might not receive the next tranches of its EU/IMF bailout aid and Athens might have missed all fiscal targets set by IMF/EU weighted on the the single currency.

 The pair retreated after rising marginally above Friday’s New York high of 1.4325 to 1.4335 in New Zealand to a session low of 1.4257 in European morning before trading sideways for rest of the day, the British pound moved lower to an intra-day low of 1.6451 in European afternoon trading after failure to penetrate Friday’s 1.6515 high earlier, the 2 currency pairs traded around 1.4275 and 1.6475 respectively near European closing.   
Versus the Japanese yen, the greenback moved sideways while usd/chf also traded sideways after staging a recovery from a fresh record low of 0.8457 in New Zealand to 0.8531.   
The dollar index, which measured the strength of US dollar against a basket of six other currencies, subdued near two-week lows of 74.752, after a recent run of weak U.S. economic data which showed growth in US was losing momentum, together with a drop in U.S. treasury yields. The dollar index traded between gain and lost on Monday, last seen slightly higher by 0.01 percent to 74.964 at European closing.   
New Zealand dollar penetrated 2008 high of 0.8215 to a fresh 26-year peak of 0.8218 since the pair floated in March 1985 in Australian trading on Monday due to rumours of solid demand for New Zealand assets such as government bonds from Asian investors and rate hike expectation before the end of the year after the recent strong economic data. New Zealand trade balance in April came in at a surplus of 1113 millions compared to the consensus forecast of 600 millions and 578 millions in previous month, with export and import in April reported at 4.65 and 3.54 billion NZD against 4.53 and 4.07 billion NZD in March.  
On the data front, U.K. Hometrack housing survey in May reported a drop of 0.1 percent month/month and 3.7 percent year/year versus 0.0% and -3.3 percent in previous month. Canada showed a 0.3 percent month/month and 2.8 percent year/year economic growth in March against a drop of 0.2 percent and an increase of 2.9 percent in previous readings.  
Data to be release on Tuesday includes:  
Japan Manufacturing PMI, Household spending, Unemployment rate, Industrial production, Construction orders and Housing starts; Australia Current account and Building approvals; Switzerland GDP; German Retail sales and Unemployment data; Eurozone Unemployment rate and HICP; Bank of Canada rate decision and Canada PPI; US Midwest manufacturing, S&P Home price, Chicago PMI and Consumer Confidence.