The U.S. Dollar remained
under pressure at the mid-session as the lack of concrete news
regarding the European Unionâ€™s plan to guarantee Greeceâ€™s debt caused
investors to remain nervous. The Dollar received an additional boost
when Fed Chairman Bernanke hinted that the Fedâ€™s exit strategy included
raising interest rates. Since the EU has failed to announce that an
agreement has been reached with Greece, traders have been focusing on
the testimony of Fed Chairman Bernanke for direction.
currencies are down versus the U.S. Dollar at the mid-session after the
European Union failed to deliver a resolution to the Greece sovereign
debt problem. On Tuesday, currencies led by a rally in the Euro,
pressured the Dollar on hopes that the EU and Greece would reach an
agreement regarding loan guarantees to ensure Greece would not default
on its sovereign debt.
Early trading conditions suggest that
traders are growing impatient with the EU foot-dragging, but the
markets could turn quickly at even a hint of a resolution. Traders
should expect unusual volatility and sudden changes in direction as
traders jockey for position ahead of this monumental pact.
viable agreement is reached today, then look for the start of a
short-covering rally. This will trigger a massive rise in the Euro. On
the other hand, a failure to announce a pact today will most likely
weaken the Euro as bullish traders will remain nervous holding on to
long positions. Any hesitation may also encourage hedge funds and
bearish traders to add to their massive short-positions.
European Union decides to guarantee Greeceâ€™s debt then look for trader
appetite for risk to skyrocket. This should trigger strong rallies in
equities and commodities. The Australian, New Zealand and Canadian
Dollars are likely to benefit the most over the short-run.
USD CHF is up at the mid-session. The weaker Euro is helping to
contribute to this strength. A move by the EU to shore up Greeceâ€™s debt
will take the pressure off the Swiss National Bank to defend its
currency against rapid appreciation and deflation.
concerns regarding Greece are helping to keep the pressure on the GBP
USD. If a resolution is announced today then, look for the British
Pound to rally. Gains could be limited as traders will refocus on the
U.K. economy. In addition, some traders are still concerned that the
U.K. budget deficit could trigger similar problems the Greece deficit
The USD JPY is the best indicator as to how investors
feel about risk and should be watched closely. The Dollar has been
slowly rising versus the Yen the past three days, but not enough to
assure traders to take on risk again. The recent action resembles
cautious optimism. The Dollar is stronger versus the Japanese Yen today
because of comments from Fed Chairman Ben Bernanke calling for higher