Market Review – 23/03/2010 22:48GMT
Euro drops broadly as uncertainty over Greece continues
The single currencies weakened against most of its major counterparts on Tuesday over concerns euro zone policy-makers are unlikely to provide a rescue package for Greece at a summit later this week.
Worries over Greece’s ability to win financial aid to help repay debt kept the euro close to a three-week low, supporting some safe-haven flows into the U.S. dollar.
The single currency reversed Monday’s rise at 1.3570 in Australia. The pair traded in a 1.3540/70 range in Asian morning as no new development about the Greek situation was heard. However, renewed selling interest emerged after the pair recovered to 1.3562 at the Asia mid-day and euro plunged to an intra-day low at 1.3475 in European mid-day on news that German Chancellor Angela Merkel’s Christian Democratic Union party said it expects her to ‘resist calls to agree’ to aid at this week’s European Union summit. Better-than-expected US new home sales and short-squeeze lifted the pair briefly to 1.3564 in NY mid-day but price took another dive afterwards to around 1.3482.
Similar to euro, cable reversed Monday’s rise after hitting an intra-day high of 1.5112 at Asian opening as profit taking has capped cable’s upside while investors were waiting for the inflation data. Later in Europe, U.K. inflation rate came in falling to 3.0% in February from 3.5% in the previous month and CBI retail sales balance dropped to 13.0 in March versus the expectation of 15.0. Weaker-than-expected inflation and retail sales data sent sterling down to an intra-day low of 1.4972 in European mid-day as these data indicated the economic recovery in UK did not look particular strong. However, renewed risk appetite triggered buying interest and the pair staged a rebound to around 1.5087 in NY mid-day before stabilizing.
The Swiss franc rose against the euro for the eighth straight day, the longest run in 17 months, on bets the Swiss central bank will allow the currency to gain as the economy improves. The eur/chf pair broke the pivot sup at 1.4300 (Oct 08′) in NY morning despite SNB’s hawkish comments saying that the central bank is ready to act ‘decisively’ against ‘excessive’ franc gains. The pair eventually hit its new record low at 1.4262 in NY afternoon.
Economic data to be released on Wednesday include: New Zealand current account, Japan export, import, trade balance, Germany manufacturing PMI, service PMI, Ifo index, E.U. manufacturing PMI, service PMI, industrial orders, U.K. distribution trade, U.S. durable goods , new home sales and building permits.