Daily FX Market Outlook-9-11-2010 by AceTrader

Market Review – 08/11/2010 23:08 GMT

Euro sinks against dollar on renewed eurozone debt concern

The single currency tanked against dollar on Monday as worries over the budget problems in Ireland and eurozone resurfaced, prompting investors to seek for safe-haven currencies such as dollar and yen.

Although euro rose briefly to 1.4085 in Asian morning, the single currency fell sharply on concerns over Irish debt together with the ruling Greek socialists’ narrow victory in election. Irish debt problem resurfaced as reports in the Irish Times and Sunday Tribune suggested that the Irish government would not be able to raise funds from international investors next year. The pair fell further after the release of weaker-than-expected German industrial production for September (which came in at -0.8% m/m, versus the forecast of 0.4%) and eventually weakened to 1.3887 in NY mid-day.  
Despite dollar’s brief rise to 81.44 against the Japanese yen in Asian morning, dollar retreated and edged lower to 81.00 in European morning on active cross buying in yen (eur/jpy fell sharply from 114.30 to 112.66) before staging a recovery in NY session on talk of good bids at 81.00-80.90.  
The British pound rose briefly to 1.6212 in Tokyo morning. However, cable tumbled to 1.6104 in Asia in tandem with euro on concerns over eurozone and Irish budgets and then moved sideways in European and NY sessions as cross buying in sterling versus euro (eur/gbp tanked from 0.8695 to 0.8608) cushioned intra-day cable’s decline.  
Economic data to be released on Tuesday include:  
Japan Current account , Trade balance (jpy), Economic watch DI, Machine tools orders, Australia NAB business confidence, Germany CPI final , HICP final, U.K. BRC retail sales, RICS house prices, Industrial prod’n, Manufacturing prod’n, Trade balance (gbp), Canada New housing price index.