The EUR climbed against the USD on Tuesday as investors grew in confidence that a deal that will resolve the current Greek debt problems will emerge. Today the Greek government is set to vote on austerity measures this afternoon. The fact that the E.U., IMF, banking institutions in France, and Greece are trying to create a solution for the crisis has helped the EUR. In order for Greece to receive the proposed bailout packages in order to meet its short term obligations the nation must pass the austerity mandate. Many in the Greek population are participating in a nationwide strike and demonstrations. However Greece is expected to approve the austerity measures today. In the short term this seems to have helped the EUR find stability. But long term this doesn’t necessarily mean that Greece is out of the woods yet. Part of the rumored solution for Greece is a proposal that French and German banks will allow for debt that it holds to have its payment dates extended far into the future. While French banks have apparently agreed to such a plan, German banks have not as of yet.
Europe will have no major economic data today. However the Greek debt vote is a dead certainty to be the critical global focus for investors. Wall Street reacted in a positive manner on Tuesday. The major equity indexes in the States all turned in solid gains. This however came in the face of continued disappointing economic releases. The CB Consumer Confidence reading was below expectations as it turned in a 58.5 mark compared to the anticipated outcome of 60.8. The S&P/CS Composite-20 HPI did no favors either as it showed that home prices in major cities dropped more than estimated. Today Pending Home Sales will be published along with Crude Oil Inventories. The housing sector remains brutalized in the States and this has certainly not helped consumer sentiment which also is suffering from a soft job market still.
The USD has range traded against the EUR in the wake of this most recent spate of debt crisis news from Europe. The USD has shown no inclination to become a dominant currency. The Federal Reserve deserves much of the credit (or blame depending on who you ask) for this. The Fed continues to offer a near zero interest rate policy and even though it is scheduled to stop its quantitative easing program next week, it is an open secret that the Fed will continue to implement a bond buying program in order to inject liquidity into the economy.
The GBP traded in range on Tuesday and this follows recent consolidated movement. The Final GDP numbers matched its forecast with a gain of 0.5%. However the Current Account figures from the U.K. came in with a bad result. Net Lending to Individuals and Mortgage Approvals numbers will be presented today and both reports are essentially picked to match last month’s results. The GBP is likely to remain under a EUR centric shadow today as the Greek austerity vote hangs in the balance. Even as the EUR gained against the USD with vigor yesterday, Sterling was not able to exactly share in the momentum. The GBP should be watched closely for a possible breakout from its consolidated mode.
The commodity markets remained mixed on Tuesday, Gold was able to produce some gains and climb above 1500.00 and it has seen swift trading. As of this morning the precious metal is near 1505.00 USD per ounce. Crude Oil climbed slightly but remains suspect with questions about the global economy abounding. The AUD did gain some ground and has come off of the weakest parts of its strong range.
The Forex and broad markets will hinge on Greek debt vote this afternoon. It must be taken into consideration that investors may have already digested the notion that the measures will be approved by Greece. Thus traders should be prepared for some quick tests of ranges emerging when all is said and done from Europe late this afternoon.
Written by bforex.com