U.S. equity markets
remain firm at the mid-session while managing to hold on to its
overnight gains. Traders have put risk back on the table because of the
strength in the Euro following the announcement that Greece would ask
for financial aid.
Investors are treating the move by Greece as
a step in the right direction although the situation is far from being
resolved. Better than expected U.S. housing data for the second day in
a row is also helping to contribute to todayâ€™s strength.
stocks look like they are stuck in a range. There has been very little
buying interest with most traders still resigned to buy on the dips.
With the equity markets churning and traders taking a cautious
approach, current trading conditions make it hard to believe there will
be a strong surge into the close ahead of the week-end.
closing price reversal top in the June Treasury Bonds is helping to put
pressure on this market into the mid-session. The easing of tensions in
Greece is helping traders take risk off the table. Downside pressure
could take this market to 116â€™15 over the near-term. Itâ€™s all about
risk the rest of the afternoon. If trader sense risk developing then
look for T-Bonds to rally.
June Gold traders took a â€śwait and
seeâ€ť approach early this morning before this market took off to the
upside. Traders were trying to digest exactly what was going on between
the EU and Greece. Todayâ€™s rally may have been triggered by the rise in
the Euro or as traders took on new hedge positions against a collapse
in the Euro. Traders are likely to buy hard assets for protection
against a currency debacle.
June Crude Oil is posting a strong
gain at the mid-session. The strengthening Euro is bringing traders
back to the long side in the energy complex. Technically this market
took out a swing top at 84.64 but is having trouble with a retracement
zone at 84.69 to 85.40.
The June Euro continued its short
covering rally at the mid-session following the surprise announcement
overnight that Greece was going to ask the EU and IMF to release the
funds they pledged two weeks ago to help the Greek government shore up
its budget deficit.
Although the financial problems in the Euro
Zone are expected to persist for quite some time and may even spread to
other member countries while the EU and IMF decide how they are going
to help provide the needed aid, shorts have decided to cover with a
vengeance today. No serious damage has been done to the Euroâ€™s
downtrend and any rally is likely to be sold again because no base has
been built to support a rally at this time.
investors feel that the rescue process is going to take a long time;
meanwhile financial problems are expected to spread to Spain, Portugal
and Ireland. This would mean that not only will the new rescue plan
cover Greece, but it will have to include the aforementioned nations.
At this time the credibility of the Euro and the European Union are at
The June British Pound is under pressure at the
mid-session. The unwinding of short Euro/Long British Pound spreads is
helping to pressure the Sterling. In addition, investors are still
nervous that the U.K. economy faces the same fate as the Greek economy
if it doesnâ€™t shore up its budget deficit. Traders are also nervous
that the upcoming election may result in a hung parliament which could
thwart the efforts of the government to establish a plan to fix the
U.K.â€™s fiscal problems.
After breaking hard to the downside, the
June Swiss Franc has turned positive. The rising Euro is helping to
underpin the Swiss as this move lessens the chances of an intervention
by the Swiss National Bank. The SNB may act, however, if volatility
gets to high.
The strong surge in U.S. equity markets is helping
to drive the June Japanese Yen sharply lower. Because of the Euro move
and the possibility that Greece may get the much needed financial aid
it needs, traders have taken risk concerns off the table and are
putting funds in higher yielding assets. Traders are borrowing the Yen
to invest in the higher yielding U.S. Dollar.
conditions are helping to contribute to the weakness in the June
Canadian Dollar. Traders for the most part are ignoring the rise in
equities, gold and crude oil. Wednesdayâ€™s closing price reversal top
has been confirmed. The chart pattern suggests the next downside
objective is .9929 to .9896. This is most likely a profit-taking break
and not a change in trend. Earlier this week, the Bank of Canada said
it would begin raising rates sooner than previously expected.