MORNING BRIEFING: USD maintains 12 month highs, Euro and GBP reverse previous gains

[RTFX-Trading]

MORNING BRIEFING:  USD maintains 12 month highs, Euro and GBP reverse previous gains

What’s new:
Euro: Investors still cautious, downside seen to prevail
Euro Zone: Spanish spending cuts & Portugal sale of debt provide initial support for Euro
United Kingdom: Governance Issue and Job figures good, but BOE governor warns

Today:



Rates in Asia and Indices:
EURUSD: 1.2682 - 1.2612.
USDCHF: 1.1115 - 1.1086.
GBPUSD: 1.4884 - 1.4815.
EURJPY: 118.47 – 117.52.
USDJPY: 93.42 – 93.07.
DowJones: 10’896.91 +1.38%
NASDAQ: 2'425.02 +2.09%
S & P 500: 1'171.67 +1.37%
Nikkei: 10’627.55 +2.25%
Shanghai 2’678.97 +0.88%  
Gold: $ 1'238.00
Crude Oil: $ 81.39
 
Comments:

US dollar maintains 12 month highs against the Euro, despite its reported trade and budget deficits and cooling expansion for the first quarter, but the explanation to this maybe beyond risk aversion, and maybe more explainable by relativity, that is that despite data may not be at its best, United States is relatively speaking in a better shape than the European Union.

Spain’s declared spending cuts and growing German GDP gave some support to the Euro yesterday. Worth also noting Portugal managed to sell 1 billion Euros in debt yesterday with a yield at 180 bps off last week’s record level, a test of the ability to procure capital by the Euro zone - another major test comes when Greece will need to cover 8.5 billion Euros in depth maturing on the 19th.

Gains in euro are likely to be limited as investors will probably use rallies to sell. Panic sell-off has eased but euro is still expected to have downward pressure. Psychological support level at 1.25 seems to hold even though some traders see EURUSD falling below 1.24.

The British pound ended the day lower across the board yesterday, even though there was a resolution for the Governance issue, and even though Jobless claims dropped and weekly earnings continued to grow all this was overshadowed by BOE’s dovish tone in its quarterly inflation report.


Good day,



Rudolf Muscat

Trading desk

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