U.S. equity markets are
rallying after earlier weakness as Greece financial worries subside.
Shortly before the opening, European Central Bank President Trichet
softened trader worries by stating that a default by Greece â€śis not an
issue.â€ť This helped trigger a short-covering rally in the Euro while
weakening the U.S. Dollar. Stock value hunters jumped on the chance to
buy cheaper stocks after the June E-mini Dow neared a minor 50% support
level at 10773.
June Treasury Bonds are trading lower after
testing a key 50% resistance level at 115â€™29. Fundamentally, T-Bonds
are breaking on the thought that todayâ€™s Treasury auction of 30-Year
Bonds will not be as well received as Wednesdayâ€™s robust 10-Year Note
The weakening Dollar is helping to boost June Gold
prices. In addition, speculators are still buying Gold as a hedge
against a possible default by Greece. Technically, traders are driving
this market into a .618 retracement level at $1159.50.
Oil is trading weaker but off its low, buoyed by a turnaround in the
Euro and a stronger equity market. Earlier this morning, crude oil
briefly penetrated an uptrending Gann angle from the 79.27 bottom at
85.27 before moving higher on short-covering.
The Euro opened
weaker but by mid-session had turned positive, driven higher by
friendly comments from European Central Bank President Jean Claude
Earlier today, the June Euro was under pressure on
concerns that Greece was coming close to defaulting on its debt. Greek
Bond and German Bund spreads had widened significantly this week
indicating that traders were taking protection against the possibility
of default by Greece.
The Euro stabilized close to the release
of this morningâ€™s ECB Policy Statement then began to rally once Trichet
began to speak. During his press conference, Trichet dismissed the
prospect of a default by a financially strapped and debt-ridden Greece.
Trichet then helped the Euro erase all of its earlier loss when he
stated that the recently agreed upon financial plan designed to bail
out Greece was a â€śworkable statementâ€ť. He also said it represented a
â€śserious commitmentâ€ť to lead Greece out of its financial dilemma. He
concluded his statement by saying default â€śis not an issueâ€ť.
statement instilled confidence in some traders, forcing weaker traders
to cover their short positions. Trichet tried to calm the markets by
telling investors that if the European Union acts as one unit, it
should be able to offer Greece a more favorable loan rate. Upon hearing
this statement, the Bond/Bund spread began to narrow.
mid-session, although todayâ€™s rally has been impressive, it has done
nothing to change the trend to up. Furthermore, the fundamentals
continue to remain weak. Some bears insist that despite having the EU
and International Fund backing, the recent fears of default has done
nothing to reassure investor confident that a viable solution can be
The June British Pound is trading higher at the
mid-session boosted by the recovery in the Euro. The trend continues to
remain down; however, todayâ€™s action has brought this currency close to
a potential breakout area at 1.5297 to 1.5317. Officially, the main
trend will not turn up until the last main top at 1.5381 is violated.
before the opening of the New York Forex Session, the Bank of England
announced that interest rates would remain at near historically low
levels. In addition, the BoE left its quantitative easing measures
unchanged. Some traders felt that the central bank would either expand
or extend this program. Analysts are now saying the BoE refrained from
making any changes because of the upcoming election on May 6th.
the mid-session the Dollar is giving up ground to higher yielding
currencies. A rebound in gold, crude oil and the equity markets is
helping the Canadian Dollar and Australian Dollar erase all of their
early losses. Stocks being pressured by Profit-taking; Greek Fears