Thursday April 10, 2008 - 10:03:30 GMT
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FX Blog- Market Snapshot Europe Mid-Session 10 April 2008
GVI Market Snapshot- Europe Mid-Session
- Market Sentiment for the USD has turned significantly more negative from early in the week. The latest USD slide, especially vs. the EUR, appears to have caught many in the markets flat-footed. Risk aversion seems back into play amid reports that a U.S. investment bank today has been liquidating three investment funds in London.
- Dealers are looking ahead to the ECB and BOE policy decisions shortly. On Wednesday, some bought the EUR/USD in anticipation of a hawkish policy posture by ECB President Trichet. Expectations are that the BOE will cut rates by -25bps. No policy changes are anticipated from the ECB. The Icelandic central bank raise its overnight target rate by +50bps to 15.50% to support its battered currency.
- Many are looking ahead to the G7 on the weekend, but officials have been sending signals that no consensus has been reached that action in support of a stronger USD is contemplated.
- The USD is weaker vs. its depressed Wednesday close vs. the EUR. The GBP is better as well. The carry trade financing currencies, CHF and JPY, are stronger.
- The Shanghai Composite and Hong Kong exchanges closed higher. The Nikkei fell. Key European bourses are currently weaker. Eurozone bond prices are higher. U.S. equities are now seen opening weaker. U.S. bond prices are better.
- The commodity currencies (AUD, CAD and NZD) are stronger vs. the USD. Gold and oil are up. A sharp decline in weekly crude oil inventories yesterday has given the oil a lift, along with the weakening USD.
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