Daily Market Outlook by AceTrader

Market Review – 08/03/2010 21:36GMT

Sarkozy’s comments help euro but gains are capped after Greece PM’s comments

The greenback has a mixed day on Monday against its major counterparts while euro was slightly up against the dollar on Monday on short covering as concerns about Greece’s fiscal crisis eased.  

The single currency extended Friday’s rebound in Asia and rose to an intra-day high of 1.3705 at European opening on short covering due to French President Nicolas Sarkozy’s comments over the weekend that there are plans to support Greece, if necessary. However, gains in the euro were limited after Greek Prime Minister George Papandreou warned that if the Greek crisis worsened it could lead to a new global financial meltdown. The single retreated sharply and eventually reached an intra-day low of 1.3605 in NY afternoon before stabilizing.  
The cable rose in tandem with the euro in Asia and price reached an intra-day high of 1.5197 in European morning. However, sterling fell sharply from there and price nose-dived in NY morning after The New York Federal Reserve said it has begun a program to expand the number of firms for conducting reverse repurchase agreements when it is ready to drain hefty excess reserves from the U.S. banking system. The pound fell to an intra-day low of 1.5031 in NY mid-day before rebound.  
On other news, Export-Import Bank of China Chairman Li Ruogu that ‘talk of China stopping to support dollar is non-sense’. Market reaction to this news was somehow muted, although analysts said going forward the Chinese move should make Japanese authorities comfortable with allowing the yen strengthen a bit more.  
Data to be released on Tueday include Japan Leading indicators, Swiss CPI, U.K. RICS house prices, Retail sales n Trade balance.