Market Review – 29/06/2011 21:39 GMT
The single currency ends higher against the greenback on first Greece vote
The euro climbed to two-week high of 1.4449 against the greenback as investors raised bets that the European Central Bank would increase interest rates next week after the passage of austerity measures by Greek lawmakers. The Greek parliament approved the medium-term plan of needed reform measures on Wednesday, with a total of 155 lawmakers in the 300-strong chamber supported the law and 138 voted against.
Earlier, the single currency rose from Asian low of 1.4339 to session high of 1.4449 in European morning on optimism Greek’s austerity plan would be passed. Although euro briefly fell on news that Greek ruling party deputy voted against austerity package and profit-taking after Greece passed the first austerity vote, strong demand in euro at 1.4330 contained weakness and the pair later rebounded strongly above 1.4400 level to 1.4444 in New York afternoon on expectation the second Greek vote would also be passed on Thursday before sideways trading.
The single currency strengthened across the board and rose strongly against the Japanese yen, pound and Swiss franc. Eur/jpy, eur/gbp and eur/chf jumped to session highs of 117.17, 0.9015 (near eight-week high) and 1.2061 respectively before profit-taking emerged, traded around 116.60, 0.8985 and 1.2040 respectively near New York closing.
Sterling tracked intra-day movements of euro and penetrated Tuesday’s high of 1.6045 to 1.6059 in European morning before dropping sharply to 1.5981, however, renewed buying interest and profit-taking in sterling’s cross-trading (especially versus the euro) lifted price again in New York session, cable later rose to an intra-day high of 1.6075 before easing.
The commodity currencies also strengthened against the greenback as stocks and commodities rose amid reduced concern over the European debt crisis after Greece approved austerity plan to help head off the euro region’s first sovereign-debt default. Aussie and Kiwi rose sharply from session lows of 1.0520 and 0.8104 to 1.0686 and 0.8265 respectively whilst usd/cad fell sharply from 0.9825 to 0.9689.
In other news, International Monetary Fund said ‘U.S. debt ceiling should be raised quickly to avoid ‘severe shock’ to U.S. economy, global markets’.
On the data front, eurozone economic sentiment fell to 105.1 in June from 105.5 in May. Economists had forecast a decline to 105.0. Eurozone industrial sentiment fell to 3.2 from 3.8 in May. Eurozone consumer confidence edged up to -9.8 from -9.9 in May. U.S. pending home sales in May increased 8.2% from April after a revised 11.3% drop the prior month and economists’ forecast of 3.8% increase.
Data to be released on Thursday include:
U.K. GFK survey; Japan manufacturing PMI, construction orders and housing starts; Germany unemployment rate and unemployment change; Eurozone HICP flash; Canada GDP; U.S. jobless claims and Chicago PMI.