Monday March 29, 2010 - 18:36:02 GMT
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Euro steady; market braces for Greece bond issue
The U.S. Dollar
continued weaker against most major currencies at the mid-session.
Trader demand for risky assets helped to pressure the Greenback. The
weakness in the Dollar is being attributed to optimism in the Euro Zone
over the potential positive impact of the new European Union and
International Monetary Fund bailout proposal for Greece. Today, Greece
is expected to issue bonds priced in Euros. This will be the first test
as to how investors perceive the viability of the aforementioned
The EUR USD is up at the mid-session as weak
shorts continue to cover after last weekâ€™s EU and IMF package to help
Greece should it be unable to find financing in the capital markets.
The proposal amounts to a pledge to help Greece out of the Euro
Regionâ€™s biggest deficit if it runs out of traditional financing
The stronger Euro is pressuring the USD CHF today. The
higher the Euro rises, the less likely the Swiss National Bank is going
to intervene to protect its economy and currency. A better Euro will
also allow the SNB to focus on the possibility of an interest rate hike
at its next meeting.
Demand for riskier currencies is helping
to boost the GBP USD. This currency pair is still in a downtrend, but
beginning to show signs of the formation of a secondary higher bottom
at 1.4797. Regaining a key retracement area at 1.5010 to 1.5080 could
trigger additional short-covering, but the trend will remain down until
1.5381 is violated.
Signs that the global recovery is gathering
momentum are underpinning the USD JPY. Although this market is
technically overbought after last weekâ€™s surge to the upside, buyers
are showing support because of todayâ€™s stronger U.S. equity markets.
demand for higher risk assets is helping to pressure the USD CAD. The
long-term downtrend could resume as traders begin to price in the
strong possibility of an interest rate hike by the Bank of Canada.
Speculators are also anticipating a better U.S. Non-Farm Payrolls
Report on Friday.
Expectations of better retail sales for March
and talk of another interest rate hike are helping to boost the AUD USD
at the mid-session.
Reserve Bank of Australia Governor Stevens
said house prices are â€śgetting quite highâ€ť. This signaled to traders
that interest rates may need to be increased further. Stevens also said
that borrowing costs need to be returned to â€śnormalâ€ť levels. Both of
these comments are encouraging traders to by the Aussie.
buying in higher risk assets is also giving the NZD USD a boost. The
higher-top, higher-bottom formation suggests that the main trend is
likely to continue up. Regaining a 50% price level at .7124 could
trigger an acceleration to the .618 level at .7199. A break out over
the last swing top at .7178 will reaffirm the uptrend. There is also
some speculation that the Reserve Bank of New Zealand may raise
interest rates as early as June.
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