Tuesday February 9, 2010 - 19:51:42 GMT
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EUR USD Showing Strength on Reports of Impending Greek Rescue
Appetite for risky
assets is helping to drive down the U.S. Dollar at the mid-session.
Profit-taking and fresh selling is apparent as investors adjust their
portfolio positions in anticipation of a resolution to the sovereign
debt problems in Greece and the neighboring Euro Region.
this time, the resolution appears to be specifically designed for
Greece. Investors are still skeptical as to whether similar problems in
Portugal and Spain will get the same treatment. These concerns could be
helping to limit today‚Äôs gains.
The EUR USD is trading sharply
higher at the mid-session on the possibility that the Greek fiscal
problems will be resolved in an orderly fashion. Investors are covering
short positions aggressively in an effort to lock-up recent profits. In
addition, new long positions are being entered as bullish traders
anticipate the possibility the Euro will return to a more reasonable
The GBP USD is mounting a strong recovery this
afternoon after trading lower for several days while breaking key
support levels. The gains in the Pound are most likely a relief rally,
triggered by short-covering. Investors are still skeptical about the
U.K. economy as well as sovereign debt issues of its own. U.K. traders
are worried that its oversized budget deficit will encourage debt
rating services to lower its credit quality.
for higher yielding assets is helping to push the USD JPY higher.
Traders have been lightening up safe haven positions in the Japanese
Yen. Volatility is likely to be high once the announcement of the plan
to shore up Greece‚Äôs finances is finally released. Long positions in
the Yen and other Asian currencies have been building for several weeks
because the current fiscal problems, driving these markets seems to be
isolated in Europe.
Today‚Äôs Euro rally is taking the pressure
off the Swiss National Bank to intervene on the Swiss Franc‚Äôs behalf.
This is helping to weaken the USD CHF. The SNB will do anything to
defend its currency against deflation and this includes applying
intervention when necessary. As long as the Euro appreciates versus the
Swiss Franc, the SNB will avoid using intervention as its main tool to
maintain stability and order to this currency relationship.
equities, gold and crude oil are helping to fuel demand for risky
assets. This action is leading investors to step up demand for the
Canadian Dollar while exerting pressure on the USD CAD. The charts are
indicating this pair is likely to return to the middle of its ‚Äúsuper
range‚ÄĚ at about 1.0550.
At the mid-session, the AUD USD and NZD
USD are benefitting from renewed demand for the higher yielding assets.
These two pairs have taken a beating lately as traders dumped
asset-related currencies during the height of the Greek sovereign debt
crisis. A return to more ‚Äúnormal‚ÄĚ risk conditions is likely to benefit
both markets. Technically, both of these markets posted closing price
reversal bottoms on Friday. These potentially bullish patterns were
confirmed overnight. The current patterns suggest a 2 to 3 day rally
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