Daily FX Market Outlook-15-11-2010 by AceTrader

Market Review – 12/11/2010 21:04 GMT

Euro surges against dollar on speculation of a EU bailout plan for Ireland

Despite extending recent decline to 1.3573 in European morning on Friday, the single currency finally staged a strong rebound from a 6-week low against dollar on market’s speculation EU leaders have hammered out a bailout plan for Ireland and other eurozone most debt-ridden countries after the 2-day G-20 Summit meeting in Seoul, South Korea.

  
  
Euro remained under pressure in Asia and weakened to a 6-week low of 1.3573 in European morning, the single currency then rallied to 1.3747 as rumour circulated that a bailout plan for Ireland had been reached. However, euro swiftly retreated to 1.3659 on Reuters news that Ireland finance ministry had denied such report, renewed buying interest there lifted the pair and euro later climbed to 1.3777 in NY morning before retreating.  
  
Versu the Japanese yen, the greenback, dollar fell sharply from Asian high of 81.46 to 81.64 in Europe on cross buying in yen as selloff in Asian stocks (Shanghai Composite closed down over 5%, the steepest fall since August 2009) sparked off massive risk aversion activities (the 3 commoditiy currencies and gold fell sharply), however, renewed buying interest quickly lifted the pair and dollar later rose to as high as 82.66 in NY afternoon.  
  
The commodity currencies tanked on Friday on speculation that China was ready to raise interest rates after Chinese consumer prices jumped 4.4 % in October, the fastest pace in 2 years. Aud/usd and nzd/usd tumbled from 1.0005 to 0.9825 and 0.7812 to 0.7700 respectively while usd/cad rallied from 1.0020 to 1.0146. Spot gold sank from 1410.30 to 1360.70, having reached a lifetime high of 1424.50 on Tuesday..   
  
The British pound fell initially in Asia in tandem with euro and penetrated Thursday’s low of 1.6082 to 1.5985 in European morning on cross unwinding in sterling. However, intra-day rally in euro helped cable stage a strong rebound and the pair later rose to 1.6185 in NY mid-day on active cross buying in sterling.  
  
Economic data to be released next week include:  
  
New Zealand Retail sales , Japan GDP annualised, GDP, GDP deflator, Capacity utilisation , Industrial prod’n , U.K. Rightmove hse prices, Swiss Combined PPI, EU Trade balance (euro), U.S. Empire state mfg , Retail sales less auto, Retail sales, Business inventories on Monday, Japan Tertiary industry index, Machine tools orders, U.K. CPI core , CPI, RPI , RPI – X, DCLG house prices, Germany ZEW index , EU HICP final, U.S. PPI , PPI core, Foreign treasury buys , Net LT TIC flows , Capacity utilisation , Industrial prod’n, NAHB housing mrkt index on Tuesday, Australia Westpac leading economic index, Japan Leading indicators, U.K. Avg. earnings 3m, Claimant count, ILO unemployment rate, U.S. Building permits, Housing starts, CPI core , CPI on Wednesday, EU Current account (euro), U.K. BRC retail sales, PSNCR, PS net borrowing, Retail sales, CBI industrial trend , Swiss Trade balance (chf), ZEW index, U.S. Jobless claims , Leading indicators, Philadelphia Fed survey, Canada Leading indicators, Wholesale sales on Thursday, Germany PPI on Friday.

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