MORNING BRIEFING: Euro declines on funding concerns

[RTFX-Trading]

MORNING BRIEFING: Euro declines on funding concerns
    
What’s new?
Euro zone: Euro falls on funding concerns
Germany: Won’t ban day-trade naked short selling, will seek to distinguish between normal use and abuse
United States: Fed officials say US recovery firm but watching Europe
IMF: Chief says would consider Yuan for SDR basket

Today:


Overnight Rates and Indices:
EURUSD: 1.2291 – 1.2227
USDCHF: 1.0886 – 1.0829.
GBPUSD: 1.5121 – 1.5052.
EURJPY: 109.87 – 108.32
USDJPY: 89.41 – 88.61.
DowJones: 10’138.52 -0.05%
NASDAQ: 2'220.65 -0.13%
S & P 500: 1'074.57 -0.20%
Nikkei: 9’570.67 -1.27%
Shanghai 2'427.05 -4.27%
Gold: $ 1’237.60
Crude Oil: $ 76.84

Comment:

The Euro was under pressure on Tuesday, slipping against the Yen and holding near its latest record low against the safe-haven Swiss franc as funding concerns in the euro zone made investors nervous. The recent Euro weakness across the board is attributed to Interbank Euro lending rates hitting their highest level in almost seven months as the market readied itself for the repayment of nearly half a trillion Euros of one-year funds to the ECB. Banks must repay 442 billion Euros to the European Central Bank on Thursday, leaving a potential liquidity shortfall in the financial system of over 100 billion Euros.

The other negative news in Europe is Greek unions today expected to hold their fifth strike of the year following the government’s plans to cut pension benefits and change labor laws. The EU and IMF highlighted that these reforms are necessary for them to provide emergency loans of EUR110bn (agreed in May).

The Euro dropped to a three-week low against the Yen on Tuesday as Japanese exporters repatriated their overseas profits before the second quarter ends later in the week. The Euro is trading at 108.67 against the Yen, down 0.94%, to 1.3314 and 1.2245, down -0.20% and -0.27% respectively against the Swiss franc and US Dollar.

Meanwhile the Yen lurched higher in the Asian session with some talk of Japanese exporters repatriating earnings, selling Euros and Dollars for Yen. Selling was also seen on the Australian dollar against the Yen, which fell 1.67% so far today to 76.63.

RTFX Trend for EURUSD turned bearish from the 28th of June at 1.2276 while EURJPY remains extremely bearish from the 22nd June.

Good day

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer