The euro gained against the majority of its most-traded counterparts on speculation Greece’s parliament will approve an austerity package needed to ensure more financial aid and stave off the currency union’s first sovereign default.
The shared currency erased losses versus the dollar after European Central Bank President Jean-Claude Trichet said policy makers are in “strong vigilance mode,” signaling they intend to raise interest rates next week. The dollar fell against most of its major peers as stocks and commodities rose.
“Most people expect a yes vote,” said Steven Englander, head of Group-of-10 currency strategy at Citigroup Inc. in New York. “The market has fully priced in an ECB hike, pretty much priced in a yes vote.”
The greenback extended its losses after a report showed confidence among U.S. consumers unexpectedly fell in June to a seven-month low.
The Standard & Poor’s 500 Index rose 1 percent. The Thomson Reuters/Jefferies CRB Index of raw materials increased for the first time in five days, climbing 1.2 percent.
The euro rose after Trichet’s comments at a press conference in Amsterdam. The ECB raised its benchmark rate in April for the first time in almost three years, lifting it by a quarter point to 1.25 percent.
“The ECB is moving ahead with tightening and trying to be as independent as it possibly can,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “It’s trying to show the markets that it’s trying to stay out of the situation and put as much burden on as they can on the politicians.”
Greek lawmakers vote tomorrow on the austerity package and vote the next day on a measure implementing it.
Stocks remain in strong shape. That has put pressure on Treasuries. In turn, the yield on the benchmark 10-year Note is back up near 3.00%. Treasuries could see some incresed volatility when results from an auction of 5-year Notes are released at the top of the hour. Today's auction comes on the heels of a 2-year Note offering yesterday that was met with relatively weak demand.
The cross extends gains to a session high Y116.30. Next level on the topside of note is Y116.65/75, a break here to open Y117.20/30. Support seen at Y115.75/70.
Strong, broad-based buying has the stock market within reach of another 1% gain. Although it is early in the session, such a move would help fuel one of the stock market's best back-to-back performances in more than a month.
Strength was also broad in the prior session, but tech stocks were a primary source of leadership. Tech stocks are garnering considerable support once again; as a group, they are up 1.0%, but Monster Worldwide (MWW 14.75, +1.18) has been a top performer in the space. Still, tech's gain is only half of what the energy sector has achieved this morning. The energy sector is currently led by Halliburton (HAL 48.02, +1.79).
US stock market opend hifher Tuesday. Energy stocks continue to extend their rally, having already up 1.8% amid a bounce by oil prices to almost $92 per barrel for a 1.5% gain.
EUR/USD $1.4095, $1.4100, $1.4135, $1.4195, $1.4250, $1.4270
USD/JPY Y80.00, Y80.30, Y81.00, Y81.50, Y81.65, Y81.70
EUR/JPY Y111.60, Y112.40, Y115.00, Y116.35
AUD/USD $1.0485, $1.0565, $1.0600
AUD/JPY Y86.20
NZD/USD $0.8065
EUR/USD printed high on $1.4330, but failed to break above again. rate back to $1.4305. Offers and stops mentioned above highs. Some German name's bids placed around $1.4250.
U.S. stocks were set to open little changed Tuesday amid Greek vote on austerity measures.
Economy: The Conference Board's consumer confidence survey for June will be released at 14:00 GMT. Economists are looking for consumer confidence to remain at 60.8.
Companies: Nike's (NKE, Fortune 500) stock jumped more than 4% in premarket trading, a day after the athletic shoe maker posted better-than-expected profit and sales.
Shares of GSV Capital Corp. (GSVC) climbed 7% in premarket trading, after disclosing Monday that it acquired 225,000 Facebook shares at $29.28 per share. Shares of GSV had surged 42% on Monday.
Shares of Macy's (M, Fortune 500) jumped 4% before the bell. The retailer announced Monday that it plans to add international shipping to 91 countries.
EUR/USD recovers again and currently holds around $1.4294 after breaking above light offers at $1.4280/85. Market speculates on the number of European banks that will pass stress tests. Resistance remains at $1.4330.
Data released:
06:00 Germany Import prices (May) -0.6% -0.5% 0.3%
06:00 Germany Import prices (May) Y/Y 8.1% 8.8% 9.4%
06:00 Germany Import prices excluding oil (May) Y/Y 5.1% - 6.2%
08:30 UK GDP (Q1) final 0.5% 0.5% 0.5%
08:30 UK GDP (Q1) final Y/Y 1.6% 1.8% 1.8%
08:30 UK Current account (Q1), bln -9.4 -4.9 -12.9 (-10.5)
09:00 Italy Business confidence (May) 100.5 100.5 101.3
The euro is quite volatile Tuesday before Greek lawmakers vote on austerity measures needed to prevent the currency union’s first sovereign default.
Greek Prime Minister George Papandreou called on lawmakers to obey their “patriotic conscience” as they began to debate a five-year budget plan yesterday.
The euro fell earlier as European Central Bank Executive Board member Juergen Stark said he doesn’t expect the international community to further finance Greece after July if the country doesn’t implement its austerity plan.
“There is only this one plan A” for Greece, Stark said in an interview with Die Welt newspaper.
The pound fell as Bank of England policy maker Adam Posen said the U.K. economy is at “little risk of inflation,” adding to market speculation that interest rates may stay at a record low in coming months.
EUR/USD printed session high on $1.4328, but failed to break above the resistance at $1.4330. As a result rate fell to $1.4335 and remains under pressure.
GBP/USD fell from session high on $1.5980/90 to the lows around $1.5912 before recovered to $1.5965.
USD/JPY holds within the Y80.70/95 range.
The US Consumer confidence report is due to come at 14:00 GMT.
The euro inched higher on Tuesday but stalled just below resistance level near the $1.4350 - $1.4360 area, as investors awaited to see if Greece's parliament will approve austerity steps that are critical for international aid that the country needs to avoid a default.
A focal point this week is a Greek parliamentary vote on austerity measures expected on Wednesday and Thursday. Without approval for the austerity measures, the European Union and International Monetary Fund say they will not disburse the fifth tranche of Greece's 110 billion-euro bailout programme.
Athens needs the aid to pay its bills next month and avert the euro zone's first sovereign default.
However, euro zone sources told that European Union officials are working on a contingency plan for Greece in case its parliament rejects the austerity programme and the country cannot receive the next instalment of EU/IMF emergency loans.
"The market seems to be taking its cues not so much from whether Greece's problems will be solved or not, but on whether or not there might be a default in the very near future," said Makoto Noji, senior bond and currency strategist for SMBC Nikko Securities. Even if Greece averts a default in the near term, its fiscal problems are unlikely to be resolved, Noji said. "But if there is no near-term default, hedge funds that trimmed positions in risky assets could put them back on," Noji said.
AUD/USD holds within the narrow range with focus on tomorrow's Japanese IP data. If the data is not as strong as expected it could soften the stance for global growth and see AUD/USD come under pressure. The rate is currently $1.0452.
Drops back to $1.5960, from around $1.5985 level into data release, the rate reacting to the current account data, which narrowed less than forecast. GDP came in at the expected level. Cable support seen between $1.5955/50, more at the earlier low at $1.5940 with stronger interest noted between $1.5936/27.
The euro strengthened amid optimism Greece’s parliament will approve austerity measures required to help avert the currency bloc’s first sovereign default.
Greek lawmakers start debating today the five-year, 78 billion-euro ($111 billion) package of budget cuts and asset sales that officials say is needed to receive a loan payment and future financing from the European Union and the International Monetary Fund.
The shared currency was also supported as Chinese Premier Wen Jiabao said his country will keep investing in Europe’s sovereign bond market.
The pound strengthened on speculation the Bank of England may raise rates earlier than expected after the Bank for International Settlements said central banks need to start raising interest rates to control inflation.
New Zealand’s dollar slumped after a report showed the trade surplus narrowed in May more than forecast.
The nation’s trade surplus was NZ$605 million ($485 million) in May compared with the median estimate of economists for a NZ$1 billion surplus.
Resistance 3: Y82.20 (high of May)
Resistance 3: Chf0.8420 (МА (200) for Н1)
Resistance 3: $ 1.6070 (area of Jun 23 high and Jun 16 low)
Resistance 3: $ 1.4440 (Jun 22 high)
06:00 Germany Import prices (May) -0.5% 0.3%
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