MORNING BRIEFING: Germany bans naked short selling, Euro back to four year lows

[RTFX-Trading]

MORNING BRIEFING:  Germany bans naked short selling, Euro back to four year lows

What’s new:
Euro: Under pressure as market reacts negatively to German Ban
Germany: In a parliament speech this morning Chancellor Merkel says” Euro is in Danger”
Japan: Good data for industrial prodcution
United Kingdom: CPI & RPI stronger than expected


Today:



Rates in Asia and Indices:
EURUSD: 1.2228 - 1.2143.
USDCHF: 1.1533 - 1.1453.
GBPUSD: 1.4372 - 1.4238.
EURJPY: 112.57 – 111.27.
USDJPY: 92.25 – 91.55.
DowJones: 10’510.95  -1.08%
NASDAQ: 2'317.26 -1.57%
S & P 500: 1'120.80 -1.42%
Nikkei: 10’186.84 -0.54%
Shanghai 2’587.60 -0.28%  
Gold: $ 1'212.00
Crude Oil: $ 68.33
 
Comments:

Euro was back to four year lows against the US dollar after Germany’s ban of naked short selling. The ban announced on Tuesday came into effect at midnight and is expected to last till March 2011; it covers naked short selling and speculation (through credit default swaps “CDS”) of euro denominated government bonds and shares in Germany’s 10 top financial institutions.

Traders say that the Ban limits liquidity into euro assets, while most likely encouraging funds to shift elsewhere, and thus putting further downward pressure on euro.

The EURUSD traded between 1.2144/1.2228 this morning, first support for the day lies at 1.2095 according to RTFXTradertip. Meanwhile US Dollar and Japanese Yen gained from market jitters.

Data for Japanese industrial output (for the month of March) showed a strong upward revision to 1.2% from the previous 0.3% indicating rising export growth mainly due to Asian demand.

In the United Kingdom data for CPI and RPI came out stronger than was expected. BOE Governor King expressed concerns of CPI risks, saying that BOE is ready to expand or reduce stimulus if necessary- thus leaving a possibility for further QE.

Good day,

Rudolf Muscat

Trading desk

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