Forex Forecast

Nordics In Focus The cautious tone in markets continued on Thursday, despite some supportive Australian jobs data overnight, which dragged some of the risk currencies higher initially. The euro started to drift lower again mid-way through the European morning but with limited news flow aside from some cautious Nowotny comments, other currencies stole the headlines.

Stronger Aussie Jobs The Australian dollar was propelled back above 1.01 by another impressive Australian employment report. Consensus forecasts had expected the unemployment rate to tick higher, and overall employment numbers to fall.

Take Cover Continued uncertainty about the post-election political set-up in Greece, questions about whether the EFSF would even approve its EUR5.2 bn payment to Greece, and concerns about Spanish banks all conspired to keep risk on the back foot.

The Slide Continues The cautious tone to markets continued on Wednesday with the dollar and yen continuing their rise. The absence of major data releases in Europe and Asia means market focus remains on the risks emanating from Greece’s new political landscape and media coverage of ‘break-up’ risks has increased dramatically.

AUD Approaching Parity The absence of economic data releases in Asia did not spare the euro from further selling as the wider market wakes up to the risks emanating from Greece’s new political landscape. The Australian and New Zealand dollars continue to weaken too as FX volatility rises and global risk appetite falls.

Still Fixated On The Euro The focus remains very much on the post-election political show in Greece, where SYRIZA leader Alexis Tsipras stirred things up by warning that “the popular verdict clearly renders the bailout deal null”.

A Slow Grind Lower While markets slowly ground lower, FX markets and the euro in particular have shown remarkable resilience towards the developments in the European political landscape over the weekend. The move lower was somewhat halted by very strong German industrial production data which rose 3 times more than expected (+2.8% m/m).

Euro Levitates The euro continues to show resilience in the face of yesterday’s worrying headlines from Greece. Although EURUSD lost 30 pips overnight, it continues to trade comfortably above 1.30 and, for now at least, there seems to be little concerted appetite to drive it sharply lower.

Euro Resilience The frustration continues for EUR bears. Indeed, EURUSD remains resilient, having rebounded from its overnight low to levels back over the 1.30 level despite the worrisome post-election headlines emanating from Greece: the Democratic Left Party’s refusal to join any New Democracy/PASOK coalition;

Euro Finds A Floor The euro sold off from the Asia open after Greece’s weekend election produced a parliament which is even less supportive of the EU/IMF bailout agreement than opinion polls had predicted.

Greece Election Stalemate The euro sold off from the Asia open after Greece’s weekend election produced a parliament which is even less supportive of the EU/IMF bailout agreement than opinion polls had predicted.