Daily Market Outlook by AceTrader

Market Review – 27/03/2010 02:10GMT

Euro rises on endorsement of Greek aid plan by ECB’s Trichet

The single currency rallied across the board on Friday after euro-zone leaders agreed on a financial aid package for Greece, however, uncertainties still remained over the country’s ability to pay back debt in the future.  

The euro initially edged higher versus the greenback after buying interest right at Thursday’s New York low of 1.3267 lifted price in Australia. Traders bought euro just before Asian opening on comments by ECB’s president Trichet at a late Thursday’s news conference in Europe, he denied criticising the inclusion of IMF finance in any rescue package and said he was ‘extraordinarily happy that the governments of the euro area found out a workable solution.’ His remarks prompted U.S. hedge funds to buy the single currency and price rose steadily in Asia on active short-covering and short-term speculative buying, euro’s intra-day upmove gathered momentum at European opening, price later surged above Thursday’s high of 1.3388 and eventually hit an intra-day of 1.3426 in NY afternoon.  
The British pound also rose in tandem with euro and reached a high of 1.4894 in Asian mid-day. Although renewed cross selling in sterling versus euro and Japanese yen caused price to slip back to 1.4811 early in European morning, renewed buying interest emerged and cable rallied to 1.4924 in NY morning before retreating after the release of slightly higher-than-expected University of Michigan consumer sentiment which came in at 73.6 versus market’s forecast of 73.0.  
Versus the Japanese yen, dollar traded sideways with a soft undertone in Asia and Europe following previous day’s rally to an 11-week high of 92.96, however, price briefly rebounded in NY morning on news of the sinking of a S. Korean naval ship due to an explosion which occured in the stern of the vessel, the incident took place near a disputed maritime border with N. Korea in the Yellow Sea. Dollar climbed to 92.90 whilst eur/yen rose to 124.20 before retreating in NY afternoon session after no indication N. Korea was involved in this incident.  
On the data front, the U.S. Q4 real GDP was revised lower to 5.6%, less than economists’ forecast of 5.7%. Nevertheless, the inventories, exports, consumption and non-residential fixed investment surged and the gain was the best in six years since Q3 of 2003. Additionally, The University of Michigan’s Consumer Sentiment Index came in at 73.6 versus the 73.0. The Dow Jones Industrial Average index ended up 9 points, paring initial gains following the overnight news of an agreement by the EU leaders on rescue plan for Greece but incident over the sinking of a S. Korean naval ship hurt investors’ sentiment.  
Economic data to be released on next week include: Japan retail sales, Germany CPI, HICP, import price index, EU consumer confidence, business climate, economic sentiment, U.S. PCE index and personal income on Monday, Japan household spending, unemployment rate, industrial production, U.K. GDP, Canada PPI and U.S. consumer confidence on Tuesday, Japan manufacturing PMI, construction order, housing starts, U.K. gfk survey, Germany unemployment rate, E.U. HICP flash, unemployment, Swiss KOF indicator, U.S. ADP employment, Chicago PMI, durable goods, factory orders and Canada GDP on Wednesday, Japan capex, tankan big manufacturing, Swiss PMI, Germany manufacturing PMI, E.U. manufacturing PMI, U.K. manufacturing PMI, U.S. jobless claims and ISM manufacturing on Thursday, U.S. Non-farm payroll and unemployment rate on Friday.