Daily FX Market Outlook by AceTrader-29-11-2010

Market Review – 26/11/2010 20:59 GMT

Euro falls to 2-month low on continued eurozone debt contagion fears and tension in the Korean peninsular

The single currency remained under pressure throughout the day against the dollar Friday as speculation that Portugal and Span would need to follow Ireland in seeking financial aid together with tension in the Korean peninsula drove investors to buy safe-haven assets like dollar.

Euro edged lower in Asia and Europe and eventually fell sharply to 1.3200 on risk aversion before staging a minor recovery in NY session.   
In other news, FT Deutschland reported on Friday that a majority of eurozone countries and the ECB are urging Portugal to apply for a financial bailout from the European rescue fund (EFSF). In addition, Spain’s Prime Minister Jose Zapatero said that ‘those who are taking short positions against Spain are going to be mistaken.’ he also ruled out ‘absolutely’ that Spain will need a bailout.   
German Finance Minister Wolfgang Schaeuble said that he is against demands to top up euro rescue fund. Another news from Reuters quoting a Spanish government source who said Spain is not pressuring Portugal to seek financial rescue. The source who asked not be be named said ‘what Spain wants is for Portugal to pass its budget and fulfill its stability program.’   
The greenback rose across the board on Friday as market was jittery by new development in the Korean peninsular and was buying dollar as safe-haven currency. The greenback traded with a firm undertone against the Japanese yen in Asia. Despite staging a pullback from 83.96, renewed buying at 83.65 lifted price again and the pair climbed to a 2-month high of 84.18 in NY morning. Reuters reported sounds of artillery fire was heard off S. Korea’s YeonYeong island, however, another news flash quoting S. Korean military who said no artillery fired at YeonYeong island and S. Korean military then said the artillery fire appears to be within North Korea territory.  
The British pound also remained under pressure in tandem with euro on Friday due to dollar’s board based strength. Despite initial sideways movement in Asian morning, cable fell sharply in Europe and eventually tumbled to 1.5575 in NY session.  
Concerns over eurozone debt contagion and the tension bewteen North & South Korea led to a broad-based weakness in global stocks, U.S. stocks fell and the DJI ended the day down by 95 points at 11092.  
Economic data to be released next week include:  
New Zealand trade data, Japan retail sales, UK housing data, EU business climate, economic sentiment, Canada current account, PPI, US manufacturing data on Monday, Japan Manufacturing PMI, industrial production, unemployment rate, Australia current account, Germany unemployment rate, Canada GDP, US consumer confidence on Tuesday, Australia GDP, UK house prices, Swiss PMI, Germany Manufacturing PMI, EU Manufacturing PMI, UK Manufacturing PMI, US Manufacturing PMI and jobs data on Wednesday,Australia trade data, retail sales, Swiss GDP, UK PMI, EU GDP, PPI, US pending home sales on Thursday, Swiss CPI, Germany, UK and EU services PMI, Canada jobs data and US jobs data on Friday.

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