Market Review – 22/07/2011 22:05 GMT
Euro falls on concerns over Greek bailout package
The single currency weakened on Friday as initial optimism was dampened on uncertainty how the aid package for Greece will be implemented to contain the spreading of the European debt crisis.
Although the single currency climbed marginally above Thursday’s NY high of 1.4435 to 1.4440 in Australia, euro eased to 1.4382 in Asia. Later, despite euro’s rebound to 1.4437 in European morning, renewed selling below 1.4440 sent the pair lower to 1.4324 in NY morning due to active cross-selling of euro versus other currencies (eur/jpy, eur/gbp and eur/chf tanked from 113.57 to 112.25, from 0.8854 to 0.8798 and from 1.1994 to 1.1693 respectively) before recovering.
In NY morning, the ratings agency Fitch said parts of the plan would result in a restricted default, which would cause a downgrade of the bonds to a low speculative grade.
Versus the Japanese yen, the greenback rebounded from a four-month low at 78.22 made in early Australian trading and rose to 78.73 in Tokyo. However, renewed selling emerged at 78.71 in European morning and price retreated to 78.28 in NY morning due to active cross buying of yen versus euro but price staged a recovery after failure to re-test said 78.22 support in late NY session.
Although the British pound extended its upmove from last week’s low of 1.5781 to 1.6341 in Australian morning, lack of follow-through buying pressured cable lower to 1.6264 in NY morning before recovering to 1.6326.
In other news, uncertainty remains about the U.S. government’s debt-ceiling as President Barack Obama and Republican Speaker of the House John Boehner both said they were not close to a deal, although it is widely believed it will be lifted in time.
Economic data to be released next week include:
Australia PPI, China Leading Index, Germany Retail sales,U.K. BBA Mortgage Approvals, U.K. Nationwide hse prices, U.K. Hometrack Housing survey on Monday;
New Zealand Exports, Imports, Trade balance (nzd), Japan CSPI, Germany Import price index, Germany Gfk consumer confidence, U.K. GDP, U.S. SnP/CS home price, Consumer confidence, Richmond Fed Manuf., New home sales on Tuesday;
New Zealand NBNZ Business Confidence, Australia CPI, China Industrial Profit, Germany CPI prelim, HICP prelim, Swiss KOF indicator, U.K. CBI Orders, U.S. Durable goods , ex. Defense, ex. Transport on Wednesday;
Japan Retail sales, Germany Unemployment change, Unemployment rate, EU Business climate, Economic sentiment, Industrial sentiment, Consumer sentiment, U.K. CBI distribution trade, U.S. Jobless claims, Pending home sales on Thursday;
New Zealand Building Permits, Japan PMI manufacturing, Unemployment rate, Household spending, National CPI, National CPI (core), Tokyo CPI , Industrial prod’n, Construction orders, Housing starts, U.K. Gfk Consumer Confidence, Mortgage Approval, Canada GDP, PPI, U.S. GDP annualised, GDP deflator, PCE core, Chicago PMI, U. Michigan survey Final on Friday.