MORNING BRIEFING: EURO manages to hold well above the 1.20 level

[RTFX-Trading]

MORNING BRIEFING: EURO manages to hold well above the 1.20 level

[B][I][U]What’s new:[/U][/I][/B]
Asian Equities: End positive following US Rally
EURO: Manages to hold support built up in yesterday’s trading
ECB: ECB press conference manages to convince markets
Japan: PM Kan warns of huge debt
United States: Regulators approve ‘circuit breakers’ in case of share price collapse


[B][I][U]Today:
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[IMG]http://www.rtfx.com/images/news/CAL110610EN.gif[/IMG]

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Rates in Asia and Indices: [/U][/I][/B]
EURUSD: 1.2148 - 1.2093.
USDCHF: 1.1444 - 1.1405.
GBPUSD: 1.4759 - 1.4694.
EURJPY: 111.28 – 110.46.
USDJPY: 91.74 – 91.27.
DowJones: 10’172.53 +2.76%
NASDAQ: 2'218.71 +2.77%
S & P 500: 1'086.84 +2.95%
Nikkei: 9’705.25 +1.70%
Shanghai: 2’569.94 +0.29%
Gold: $ 1,222.90
Crude Oil: $ 75.61

[B][I][U]
Comments: [/U][/I][/B]

Yesterday Euro enjoyed some support on the back of comments from a Chinese national pension fund chief that expressed views that euro will gradually stabilize and survive the crisis and expressed concerns on the United States’ fiscal deficit. Euro also got support from a positively concluded ECB press conference.

The ECB, as was expected, left its policy rate unchanged. In the press conference President Trichet announced 3 month tenders would be extended through to September, this probably provided comfort in the sense it will help provide liquidity and will reduce the impact of the EUR442bln in 1 year loans falling due in July. The outlook given was one of moderate economic growth, and a ‘broadly balanced’ economic outlook. Trichet defended ECB bond purchases and managed to convince markets that price stability is not threatened by these purchases.

In Japan prime minister Kan, in his first official public speech warned of a “risk of collapse” due to a huge outstanding public debt, he also describes Japan’s public finances as “the worst of any developed country”.

The United States has approved measures to avoid a repeat of the share price collapse of 6th May. The Securities and Exchange Commission has implemented circuit breakers that would stop trading in some stocks for five minutes if they fall more than 10% over five minutes.

Meanwhile US-Chinese disagreement over Yuan revaluation continues as US politicians threat to impose trade sanctions on China if it still refuses to revalue Yuan.

The AUD and NZD lost support in early trading on fears of Chinese authorities would again be intervening to further cool the economy, after China reported the highest inflation rate in 19 months.

Good day,


Rudolf Muscat
Trading desk

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