Forex Market
USD/JPY Analysis
Opened at Y79.63 in Asia and was jostled about by cross moves as the market hung on any headlines, and fell to Y79.53 as EUR/USD sales on the back of an FT article showing reluctance from some EU states to ratify the deal initially weighed on EUR/JPY.
EUR attempts lift-off as second Greek bailout deal announced
The meeting of European finance ministers dragged on well into the Asian session with a press briefing only announced close to mid-morning. The headline announcement revealed a deal had been struck with a €130 bln bailout package with Greece’s debt/GDP ratio to fall to 121% by 2020.
EUR/USD Analysis
EUR/USD closed in NY Friday at $1.3140 with rate marked up to $1.3170 into early Asian trade Monday on the positive outlook regarding today’s Eurogroup meeting on Greece, as well as China cutting it’s RRR by 50bps, adding to the risk on tone.
GBP Analysis
Cable closed in NY Friday at $1.5835, marked lows into early Asia Monday at $1.5834 before pushing higher, the rate tracking EUR/USD early move up with ‘risk on’ trade seen prompted by an expected positive outcome from today’s Eurogroup meeting, concerning Greek debt aid, as well as the weekend cut in China’s RRR by 50bps.
JPY Analysis
Opened with a small gap higher in Asia around Y79.60 as risk appetite returned with positive Greek bailout news expected and Saturday’s RRR cut from the PBOC. Importer demand triggered stops and along with strong euro-yen macro demand, took the pair to highs of Y79.89 before encountering exporter offers.
Behavioral Finance: Daily Forex Outlook: China and Japan offer eurozone support via IMF
EUR USD (1.3210) Japan and China have showed joint interest in expanding the IMF resources to address the eurozone crisis provided the European members work towards lifting the €500 billion cap on the rescue vehicle, the ESM.
FX Daily Strategist: Europe
Expectations build for a deal – but we’ve been here before The Eurozone developments over the weekend have raised expectations of a deal from today’s Eurogroup, due to kick off at 3.30pm Brussels time. German Finance Minister Schaeuble’s comments were seen as less combative;
Technical Analysis
EURUSD grinding higher but with poor momentum. Short term no strong directional conviction, EURJPY today’s gap and spike to be monitored very close as possible ending the upside correction, EURSEK rejected from 8.8520 but a new attempt will emerge from 8.80/82,
AUD/USD Analysis
Opened in Asia with a gap up at $1.0765 from the NY close of $1.710 following positive press regarding the EU Fin Min meeting today which is expected to approve the 2nd Greek bailout package.
Another Greek Week, but China hits headlines by easing policy
The surprise over the weekend came not from Greece, for a change, but from China, which announced a 50bp reduction in the Reserve Ratio Requirement for banks. This is expected to add some Yuan 360-400 bln of additional liquidity into the local banking system.
USD/JPY Analysis
Opened with a small gap higher in Asia at Y79.60 having closed last week around Y79.55 in NY. Risk appetite returned with the market now eyeing the Brussels meeting later today which is expected to agree the 2nd Greek bailout package.
US FX Market Summary
The EUR strengthened Friday on hopes that the complex negotiations over a new debt relief package for Greece were coming together ahead of a Monday meeting of euro-zone finance ministers. The common currency has rallied 4.2% against the dollar since touching its lowest level in more than 16 months in January.