Market Review – 15/04/2010 21:23GMT
Euro retreated as Greece woes remains
The euro declined broadly on Thursday as the details on how the aid for Greece would work remained uncertain. The Greek/German government bond yield spread widened to near record levels, indicating continuing concerns about Greece’s ability to fund its debt.
The single currency was soft throughout Thursday and price nose-dived to 1.3521 in European morning after triggering stops below 1.3595/00 as Greek/German govt. bond yield spreads remained above 400 basis points while five-year Greek credit default swap prices once reached 455 basis points which exceeded the record closing high of 444 basis points hit a week ago. Euro was also pressured on renewed risk aversion as the European Central Bank’s start warned the sovereign debt problems engulfing countries like Greece may persist. In the other news, Greece said on Thursday it is seeking talks with the EU, the ECB and the IMF on a multi-year economic program that could be backed by financial aid if the Greek government were to seek such assistance.
The British pound rose to a 2-month high of 1.5524 in European morning due to active cross buying in sterling together with the U.K. election polls results which showed opposition Conservatives have extended lead over ruling Labour. Although the pair tumbled to 1.5385 in tandem with euro on the renewed Greek debt concerns in European mid-day, sterling pared its loss and staged a strong rebound from there to around 1.5510 before stablizing in NY afternoon.
On the data front, U.S. net foreign treasury purchases of U.S. treasury bonds came in at 48.1 billion in February versus 61.36 billion purchases in January. U.S. net capital inflows was 9.0 billion in February against 10.2 billion outflow in January. The U.S. Empire State manufacturing activity index rose to 31.86 in April, much higher than the expectation of 24.0 and well above 22.86 in March while U.S. industrial production rose by less-than-expected 0.1% in March versus the economists’ forecast of 0.7% increase with upwardly revised 0.3% rise in February.
Economic data to be released on Friday include: Swiss Combined PPI, EU HICP final, U.S. Housing starts, Building permits and Michigan sentiment survey.