Daily Market Outlook by AceTrader

Market Review – 23/04/2010 22:24GMT

Euro rallies on short-covering after Greece announced aid request

The single currency rebounded strongly from one-year low against the buck after Greece announced it will activate a financial aid package while Germany said it is prepared to commit to a plan that will bail out the debt-strapped country whilst the greenback strengthened to a two-week high against the Japanese yen on Friday as U.S. March new-home sales rose the most in almost five decades.

Mounting anxiety that Greece would default on its debt weighed on the single currency in Australia. Short term speculators sold the Euro on concerns that the Group of 20 industrialized and developed nations might not come up with an effective plan to address Greece’s debt problems. Price dropped to 1.3201 in Australian session before stabilizing. However, euro rebounded strongly from there on active demand by sovereign names as well as announcement by Greece’s PM George Papandreou that Greece would soon ask for the activation of emergency loans from the Eurozone and the International Monetary Fund, though the European Commission had no immediate comment. Euro climbed steadily higher vs usd and other currencies in New York session and rallied to as high as 1.3400, price closed near the day’s high at 1.3383.  
Despite trading sideways initially in Asia and Europe, the greenback rallied to 94.43 (two-week high) against the yen on renewed risk appetites after the U.S. new home sales was reported to rise by 26.9% which is the largest rise since April 1963 (31.2%). In addition, U.S. durable goods which came in weaker than expected at -1.3% in March versus the economists’ forecast of an increase of 0.3% and upwardly revised 1.1% rise in February.  
The finance ministers and central bankers from the top 20 industrialized nations begin another economic summit in Washington on Friday. On top of the discussion list will be Greece’s debt problems and the revaluation of the Chinese yuan.   
Economic data to be released next week include: Japan CSPI on Monday, Australia PPI, business confidence, Germany Gfk index, import price index, export price index, U.K. CBI distribution trade, consumer confidence, U.S. Midwest manufacturing, consumer confidence on Tuesday, Japan retail sales, Australia CPI, Germany CPI, HICP and U.S. rate decision on Wednesday. U.K. House price, Germany unemployment rate, E.U. Business climate, economic sentiment and U.S. jobless claims on Thursday. U.K. Gfk survey, Japan household spending, CPI, industrial production, housing start, unemployment rate, construction orders, E.U. HICP flash, unemployment rate, Swiss KOF indicator, U.S. PCE, GDP deflator, Chicago PMI, Canada GDP and PPI on Friday.