Daily Market Outlook by AceTrader

Market Review – 02/03/2010 22:50GMT

Euro rebounds from 10-Month low as Greece to set new deficit cuts

The single currency rebounded strongly from a 9-1/2-month low against the dollar on Tuesday as investors awaited new plans to relief Greece’s debt crisis and some types of help from the European Union.

The euro extended Monday’s fall and remained under pressure in Asia before tumbling to an intra-day low of 1.3433 in European morning (lowest since May 2009) after Greece’s biggest public union called for a 24-hour strike on March 16 to protest expected austerity measures from Athens. However, the single currency rebounded sharply from there after the Greek government stated it will announce new deficit cuts on Wednesday, heating up speculation that a solution to its debt crisis may be approaching its end. The pair rose to an intra-day high of 1.3622 in NY afternoon before stabilizing. Euro closed the day up slightly over 0.3%.  
Versus the yen, dollar rebounded briefly to 89.38 in Asia but resumed its recent decline afterwards. The pair picked up more downward momentum in NY on return of risk aversion and tumbled to last month’s low of 88.55 in NY afternoon before rebound.  
Both RBA and BOC announced their rate decisions on Tuesday. Both acted as expected as RBA lifted rates by 0.25% to 4.00% from 3.75% while BOC kept the rate unchanged but signaled possible rate increases in coming months. Australian dollar rose against the greenback in tandem with Canadian dollar, closing the day up over 0.27% and 0.46% respectively.  
Data to be released on Wednesday include Australia GDP, Germany PMI service, U.K. PMI service, Nationwide Consumer Confidence, EU PMI service, Retail sales, U.S. ADP employment, ISM non-manufacturing, Beige Book on Wednesday.