Monday May 12, 2008 - 09:44:14 GMT
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FX Blog- Market Snapshot Europe Mid-Session 12 May 2008
GVI Market Snapshot- Europe Mid-Session for May 12, 2008
- Market sentiment for the USD turned back positive on the USD early Monday, as the dust settled on the developments at the end of last week. We had noted in the middle of the previous week that it had seemed that the markets were starting to switch to a medium term view on prospective relative growth patterns in the U.S. vs. Europe. Many worry that the ECB is inappropriately focused on price levels in the German economy to the detriment of a sizeable (35-45%) portion of the rest of Euroland.
- There is also a new sense that Washington now feels USD is undervalued following a weekend press report. The unrestrained rise in oil prices continues to unsettle the markets and the USD, although oil has appeared to have unlinked from the USD. Critically the EUR/USD is trading back below the pivotal 1.55 line.
- No major data are due from the U.S. today.
What the Market Prices are Indicating:
Forex and Commodities:
- The USD is higher vs. the EUR, but the GBP is higher from late Friday following hot U.K. PPI data . The EUR/GBP is lower.
- The carry-trade driven currencies (AUD, CAD and NZD) are trading mixed vs. the USD. Gold and oil are lower. Crude oil remains at near record levels.
- The carry trade financing currencies, JPY and CHF, are weaker vs. the USD. EUR/JPY is higher. The EUR/CHF is stronger. The CHF is steady vs. the JPY
Equities and Bonds:
- The Shanghai Composite closed modestly higher, and the Hong Kong was closed for a holida. The Japanese Nikkei closed better.
- Key European bourses are trading mostly higher. Eurozone benchmark bonds are weaker.
- U.S. equities are seen opening higher later. U.S. bond prices are weaker.
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