Monday, February 20, 2012

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

EURUSD up on Greece Optimism. PBOC lower reserve requirement. Japan record trade deficit

Posted: 20 Feb 2012 05:51 AM PST

EU Leaders on the Wires

Posted: 20 Feb 2012 05:27 AM PST

Say:

  • Call for reinforcing single-market governance
  • 11 EU leaders send letter to Barroso, Van Rompuy
  • Europe economy at ‘perilous moment’
  • Must step up efforts on digital single market
  • EU must create internal energy market by 2014
  • 11 EU leaders deeper econ integration needed with U.S.
  • Leaders urge Basel capital, leverage rules be fully applied
  • Lagarde says Greece has made significant efforts on economy

The NY Morning Review

Posted: 20 Feb 2012 04:30 AM PST

The Peoples Bank of China signalled the intention to lower the reserve requirements banks need to hold on balances at the bank by 50 basis points over the weekend in a way to stimulate economice activity in a declining housing market and as a result of weakness expected by a slower Euro economy.  The move led to a move into risk on the Sunday night opening and that bias has remained as NY is set to open.  The dollar is down against all the major currencies.  Against the Yen the dollar has faired the best, nearly unchanged from Friday’s levels. Over night, the Trade Balance numbers for the month of January showed a record deficit of -1.48 trillion Yen.  Exports fell 9.3% from the same month last year, while imports increased on the back of high energy imports. Despite the worsening trade data, the USDJPY fell (Yen higher).  The market may be ready for a consolidation/correction after the move higher this month. Since the most recent low on February 1st at 76.02 the pair has move steadily higher to 79.88.  Along the way the price has moved above the 100 and 200 day MA (1st close above the 200 day MA since April 13th 2011.  On Friday, the price closed above the 38.2% of the move down from the April 11 high at the 79.36 level -  a bullish development. In today’s fall from the high, this retracement level is the low for the day.  A move below this level will be needed to give the seller/profit takers more comfort in their bearish move today.  In the EU, the leaders will be meeting in Brussels today to discuss whether or not the next tranche of aid will be heading to Greece (130 billion expected). The market seems to optimistic that a package will be approved today. Time is running short as on March 20, Greece is scheduled to pay off 14.5 billion EURO of maturing debt.  The details of the Private Sector Involvement in the restructuring of their bond holdings is also not yet resolved.    There is much to do still and although it seems that the expectation is for a solution today, there will always be the chance for continued market skepticism and or disappointment as the reality of Greece’s debt burden continues to weigh on the troubled country and the EU. For traders today, the US holiday (Presidents Day) will only make liquidity risk higher.  Event and market risk are already at a high level. So be sure to follow the technical clues from the markets price action.

Juncker says sizes for public aid still open for Greece

Posted: 20 Feb 2012 04:24 AM PST

He has added that:

  • Nobody intends to have Greece outside Euro Area (it would be bad)

Euro firmer after Bundesbank says ECB policy will remain “very expansionary”.

Posted: 20 Feb 2012 03:04 AM PST

  • Building private spending to support growth.
  • Sees no need to expand collateral riles in Germany.
  • German growth outlook improved “perceptively”.
  • Economy may strengthen in the second quarter.

Greek Finance Minister Source Says…

Posted: 20 Feb 2012 02:59 AM PST

  • There appears to be an agreement at Eurozone working group lowering interest rate on EU/IMF loans already paid out to Greece.
  • There appears to be an agreement on particiaption in debt swap on Greek bonds held investment portfolios on Central Banks.
  • Questions remain on whether profits from Greek bond portfolio should be transferred to Greece.
  • Deeper haircut for Greece’s private bondholders still being discussed.
  • Talks on Greece escrow account hav emoved forward.
  • Appears deal to cut rate on first bailout is agreed.

Officials say Greek bailout approval is likely to take place the week of March 12th.

Posted: 20 Feb 2012 01:22 AM PST

S&P analyst says negative outlook for Japan means 1/3 chance of downgrade over the next 2 years.

Posted: 19 Feb 2012 11:44 PM PST

Adds that a failure of sales tax legislation alone would not promp Japan downgrade.

S&P keeps Japan rating at AA-, outlook negative.

Posted: 19 Feb 2012 11:41 PM PST

ECB’s director general for legal services says they are looking at how the Eurozone governments can channel profits from the ECB’s Greek bond holdings to aid Greece.

Posted: 19 Feb 2012 11:18 PM PST

2-20 Economic Calendar

Posted: 19 Feb 2012 08:34 PM PST

China Sets Yuan Reference Rate @6.2938

Posted: 19 Feb 2012 05:42 PM PST

UK Rightmove House Prices Rose 4.4% MoM and 1.4% YoY

Posted: 19 Feb 2012 05:03 PM PST

Japan’s Trade Balance

Posted: 19 Feb 2012 04:57 PM PST

Japan’s January Trade Balance posted the largest deficit in over 20yrs at -1475B, close to estimates. The Yen pushed back off its worst levels since August. The initial bid in USDJPY to open the week was due to “progress” on the Greek aid package and China easing policy through reserve ratio’s.
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