An easing of Eurozone sovereign debt tensions and a positive start to the US earnings season provided a more supportive environment for risky assets, although the mood in the markets remained fragile ahead of a series of key events. The latest eruption of Eurozone concerns, on speculation that Portugal would follow Greece and Ireland with bailout requests, was soothed somewhat with an assurance from the Japanese that they would buy more than 20 per cent of a forthcoming bond issuance from the European Financial Stability Fund, echoing similarly Eurozone-supportive comments made by the Chinese. This has seen the Euro gain nearly a cent against the Dollar to stand at just below $1.30, and this return to risk has also seen Sterling rise around a cent against the Dollar. labour market.
Sentiment remains fragile however with a sale of Portuguese debt later today, with some viewing it as an acid test of the country’s ability to raise funds. Though we haven’t yet seen an embarrassing situation where a debt auction has been held to an empty audience, the cost of borrowing, if prohibitive, may force the Portuguese hand towards the EU.
Through a combination of humanitarian and economic reasons, the Aussie Dollar, the stellar performer in the FX markets of the last two years, is the worst performing currency of 2011 thus far. Fears that the rapidly deteriorating flood situation in Queensland, the country’s main coal producing region, could hit its economy and deter the RBA from further rate rises have not helped the currency. The expectation of rampant Chinese demand for Australian raw materials, that has driven the currency higher over the last two years, has also been undermined by developments in China, where calls for further tightening measures have intensified recently.
Today, aside from the closely watched Portuguese bond auction, it is a fairly quiet day for significant data releases. This morning includes the UK trade balance for November. The deficit in goods has slipped back of late from the levels seen in the first half of 2010, and is expected to show a reading of around £8350 million, a small improvement on October’s £8529 million. The data, however, are both volatile and prone to subsequent revision, so it is hard to envisage a particularly significant outcome in either direction. Also released this morning is Eurozone industrial production. Expectations are for a rise in output of around 0.5% in November, following on from a 0.7% increase in October. In the US this afternoon there is little data of note. This evening, the Beige Book report of activity in the Federal Reserve’s Districts is released. This will be looked at for evidence of firming in activity, and perhaps some improvement in the labour market.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.
Posted in Daily Market News on May 30 2014
The Euro has continued its poor start to the year as fears about the state of Portugal’s finances take hold taking the single currency to a 4 month low against the USD and Sterling. Concerns that Portugal will ask for aid from the EU and IMF were fuelled a board...VIEW FULL ARTICLE
Posted in Daily Market News on Jan 11 2011 by admin