Forex Forecast

Greek Banks Recapitalised A US holiday made for quiet trading conditions overnight, but earlier risk finally found some consolation during the European session after some favourable news flow. This boost to sentiment ultimately faltered however as investor concern over the currency union, and especially its banking sector, returned.

Euro Squeezes Higher Risk finally found some consolation overnight as European equity markets rallied on the back of some more pleasant news out of the Eurozone. An Italian auction also passed without incident.

Euro Squeezes Higher Investors took heart from a pair of news reports, allowing both the euro and the Australian dollar to squeeze 80 pips higher overnight. First, five weekend opinion polls in Greece showed the pro-bailout New Democracy party has nudged ahead of the anti-bailout SYRIZA.

Sentiment Still Vulnerable Nervous trading seems set to continue, with the drop in EURUSD below the 1.25 level on Friday highlighting the continued vulnerability of the euro amid the continued absence of any concrete policy initiatives.

Nervous Calm In Europe In the absence of any major destabilizing news, risk assets were better bid in the European session with EURUSD pushing up to 1.26 and AUDUSD back to 0.98. Equity markets were generally trading in the black and periphery spreads to Germany tightened.

EURCHF In Focus EM Asia currencies experienced considerable selling pressure overnight, but both the euro and the Australian dollar managed to hold their ground. The focus remains on EURCHF after yesterday’s large spike and a smaller one overnight, fostering unsubstantiated market speculation about the possible imposition of fees on SNB sight deposits in a bid […]

Euro Remains Heavy The sudden EURCHF spike provided a distraction from all the post-Summit talk from various European officials, fostering market speculation of SNB action and the imposition of fees on sight deposits to defend the floor. The effect quickly wore off, as there did not appear to be anything substantive behind the move.

Further Soft EU Data FX markets were fairly volatile in the European session. A series of soft growth indicators out of the Eurozone sparked a wave of selling in risk assets with EURUSD pushing towards 1.2500. However, significant short-covering and a turnaround in European equity and fixed income markets saw FX largely reverse the moves.

Decisions Deferred Wednesday night’s EU Summit produced no decisions on any substantive issues, as widely expected. The concept of Eurozone bonds was discussed but European Council President Van Rompuy revealed that no one called for their immediate introduction.

Euro Slump Fears of a disorderly Greek exit pushed EURUSD below 1.2600 even before the ‘informal’ EU Summit kicked off, challenging those euro bulls who had been assuming that ‘all the bad news is priced in’ and serving as a reminder of the continued scope for disappointment.

DXY Bid Ahead Of Summit The dollar pushed higher overnight, with EURUSD breaking through 1.2650, as expectations fell ahead of today’s ‘informal’ EU summit. In the Asian session, a bout of euro selling took place after a newswire headline sensationally claimed that “preparations for a Greece euro exit are being considered” – even citing former […]