Daily FX Market Outlook-17-11-2010 by AceTrader

Market Review – 16/11/2010 23:02 GMT

Euro tumbles to a 7-week low against dollar on European debt woes

The single currency sank to a 7-week low against dollar on Tuesday as worries over Greek and Irish debt crisis pressured euro below 1.3500.

Euro rose initially to 1.3657 in Asia as New York Federal Reserve President William Dudley said the goal of the Fed’s controversial bond-buying program was to ease financial conditions and not to devalue the greenback. The single currency staged a pullback and despite euro’s brief bounce to 1.3643, selling interest there sent euro lower and the single currency tumbled to a 7-week low of 1.3446 in NY afternoon on dollar’s broad-based firmness.  
The single currency was pressured in NY session as the Greek biggest employers’ group said Greece would probably miss its fiscal targets this year and next due to slow reformation of the economy.  
Versus the Japanese yen, the greenback fell briefly to 82.85 in Asian mid-day on risk aversion after the selloff in the Chinese stocks (Shanghai Composite lost almost 4% on Tuesday on fears of further monetary tightening). However, renewed buying emerged there and lifted dollar to a 6-week high of 83.60 in NY afternoon.  
The British pound edged lower in Asia after breach of Monday’s low of 1.6042 at Asian opening. Later, despite cable’s brief bounce to 1.6087 in European morning in reaction to a slightly higher-than-expected U.K. Inflation data (U.K. CPI for October came in at 0.3% m/m and 3.2% y/y versus the forecast of 0.2% m/m and 3.1% y/y) , sterling tanked and extended its selloff in NY session as BOE Governor Mervyn King said the central bank could do further quantitative easing if necessary. Cable eventually tumbled to 1.5840 in NY afternoon.  
U.S. stocks tumbled on Tuesday on fears of Chinese monetary tightening together with more European bailouts. DJI tanked 179 points or 1.59% and ended the day at 11023. FTSE-100, CAC-40 and DAX tumbled by 2.38%, 2.63% and 1.87% respectively.  
Economic data to be released on Wednesday include:  
Australia Westpac leading economic index, Japan Leading indicators, U.K. Avg. earnings, Claimant count, ILO unemployment rate, U.S. Building permits, Housing starts, CPI core, CPI.