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Forex Daily News | Forex Articles | Forex Information
Saturday, 20 November 2010 08:08

Dollar Ready to Respond to a Clear Sentiment Trend but Liquidity may be an Issue Next Week

Contributed By: DailyFx

* Dollar Ready to Respond to a Clear Sentiment Trend but Liquidity may be an Issue Next Week
* Euro Traders Prepare for a Resolution for Ireland and to Shift the Focus on Portugal, Spain
* British Pound Stumbles on Drop in Construction Expectations, Tucker Downplaying Inflation
* Canadian Dollar Sensitive to Investor Optimism but CPI and Retail Sales May Steal the Show
* Japanese Yen Slowly Deflating as Market Comes to Grips with Lasting Stimulus
* Australian and New Zealand Dollars Remain Highly Sensitive to Ripples in Global Risk Appetite

Dollar Ready to Respond to a Clear Sentiment Trend but Liquidity may be an Issue Next Week

The dollar retraced nearly all of the gains it had made in the first two days of this past week when all was said and done. Friday offered up the third consecutive decline for the benchmark currency; and the technical implications of this final performance could not be ignored. For the trade-weighted dollar index, the week-ending push made a notable test of the same level that held the currency down for nearly six weeks before Tuesday’s critical breakout. It is no coincidence that this former ceiling is now marking a tentative floor to impede trend development. From the majors, we can see the same measured correction. The most familiar setup comes from EURUSD which has moved back up to the frequented 1.37 level; though retracements for GBPUSD, USDCAD and AUDUSD are very similar in nature even if the technical figures are not as prominent. What truly grounds this shared path for the greenback in fundamentals though is the correlation it maintains with other asset classes. With the S&P 500 equities index gravitating back towards 1,200 and gold testing $1,365 (the breaking point of a bull trend that directed price action for over three months), it is clear that there is an underlying current to investor sentiment itself.

Through the final 24 hours of this past trading week, there were notable updates on two of the market’s most headline-worthy themes. Ireland has focused general concerns surrounding the convoluted situation the European Union faces in securing financial stability in the region. That said, a definitive move from capital flows and the dollar in response to this matter is now being reserved for the next consequential development – namely, the announcement of a bailout. Therefore, speculation that Ireland will have to abandon its favorable tax policies and news that Allied Irish is marching towards a liquidity crisis is merely building interest into what traders see as a meaningful climax (though Europe’s troubles hardly end with this single member). The same, tepid interest from investor confidence was paid to the announcement that China had raised the reserve ratio for its banks for a fifth time this year. Though a step clearly intended to cool growth and capital turnover in the economy, the market has grown accustomed to the PBoC’s measured efforts. Going forward, either or both of these particular catalysts can shape the appeal of the dollar as a safe haven currency; but a market weary of the pitfalls in speculative trends overshooting fundamentals may require a more explicit resolution to these bigger fundamental themes before committing to a lasting run.

When the financial headlines are dedicated to global developments, it is easy to miss the fundamental developments that direct the dollar’s bearing. The US docket may have been empty of scheduled indicators through the final session of this past week; but comments directed to the Fed’s stimulus program bear reflection. Board member Plosser remarked Friday that it was “premature” to assume the central bank would buy the entire $600 billion available over the coming 8 months. If indeed the Fed decided it was appropriate to discontinue its monthly purchases, a significant burden would be lifted for the greenback. Looking out over the next week, we have a concentrated docket for economic releases. A range of indicators including the second reading of 3Q GDP, existing and new home sales, personal income and spending, durable goods and a national activity index are squeezed into a period foreshortened by the Thanksgiving holiday. Falling on Thursday, this American holiday will sap speculative liquidity over the final two days of the week. As such, it could be exceptionally difficult to jump start a meaningful trend next week.

Euro Traders Prepare for a Resolution for Ireland and to Shift the Focus on Portugal, Spain

We seem to detect new symptoms of the Euro-region’s financial troubles every day. However, the market seems to be acclimatizing itself to these developments, waiting for evidence of the true fallout. However, as fundamental traders, we should take note of these developments to assess the likelihood of and full consequences to a true crisis. With EU, IMF and ECB officials currently scrutinizing Ireland’s financial books; news that Allied Irish lost 17 percent of its deposits this year and tripled its dependency on ECB loans suggests there is no natural solution to be found. In the meantime, Germany and the Netherlands are forging ahead with permanent bailout regulations to share losses with bond holders.

British Pound Stumbles on Drop in Construction Expectations, Tucker Downplaying Inflation

Bank of England Deputy Governor Paul Tucker could have balanced dovish rate expectations when he said the group shouldn’t dilute its price stability commitments; but a forecast for prices to drop below the 2 percent target did little to further interest rate calls. For macro data, a quarterly RICS construction activity survey dropped to its lowest level in a year-and-a-half as a supply glut and weak economy curb activity.

Canadian Dollar Sensitive to Investor Optimism but CPI and Retail Sales May Steal the Show

When it comes to USDCAD, the influential swings in risk appetite trends are significantly subdued. For a true trend to develop for this pair, the outlook for growth and interest rates between the two has to shift. We may see just such a meaningful change develop next week. On the loonie’s docket, we have both retail sales and CPI data. This could raise doubts about growth and feed criticism in the BoC’s early hikes.

Japanese Yen Slowly Deflating as Market Comes to Grips with Lasting Stimulus

It is worth noting that over the past three weeks we have seen both a strong rallies and slumps in risk appetite trends. And, through it all, USDJPY has maintained its steady appreciation. From this, we can start to see the yen’s position as a safe haven fade – a reality that has been ignored for too long. Next week, CPI data will help to remind investors that there is long-standing deflation and little hope for yield in Japan.

Australian and New Zealand Dollars Remain Highly Sensitive to Ripples in Global Risk Appetite

In monitoring underlying sentiment trends, the natural inclination is to keep track of those currencies that are directly responsible for the fundamental bustle. However, given the nature of capital flow, it is those currencies that are at the extremes of the risk spectrum that see the biggest moves. Both the Aussie and Kiwi dollars are tuned into Irish, Chinese and the US news wires, waiting for their net meaningful trend.

Published in Forex News
Thursday, 18 November 2010 11:33

EURJPY a close back below 110.00 would put the pressure back on the downside

Contributed By: DailyFx

 EURJPY_a_close_back_below_110.00_would_put_the_pressure_back_on_the_downside

EUR/JPY:The market has done a very good job of holding above the daily Ichimoku cloud to suggest that we could be on the verge of a material shift in the structure in favor of significant upside over the medium and longer-term. Daily studies are however in the process of consolidating, so the preferred strategy is to look to buy into dips rather than on upside breaks. Ultimately, only a close back below 110.00 would put the pressure back on the downside.

Published in Forex News

Contributed By: DailyFx

 EURCHF_only_a_close_back_below_1.3200_would_give_reason_for_concern

EUR/CHF:Despite the latest setbacks, we retain a constructive outlook with the market in the process of carving out a major base. There is some very solid internal range support in the 1.3200’s and we would expect to see any additional declines very well supported ahead of 1.3200 on a close basis. Ultimately, only a close back below 1.3200 would give reason for concern. Look for a break back above 1.3500 to reaffirm outlook and open the next major upside extension beyond 1.3835.

Published in Forex News

Contributed By: DailyFx

 AUDUSD_Any_intraday_rallies_should_be_very_well_capped_copy

AUD/USD:Clear signs of another short-term top emerging with the market stalling out by fresh post-float record highs at 1.0185 several days back, and then reversing course to end a sequence of consecutive daily higher lows. The latest break back below the 20-Day SMA further encourages bearish outlook from here, and we will look for a 2-day close below the 50-Day SMA (0.9750) for additional bearish confirmation. From here the risks are for declines towards critical support by 0.9650, below which will really accelerate. Any intraday rallies should be very well capped ahead of 1.0000.

Published in Forex News

Contributed By: DailyFx

 Crude_Oil_Wipes_Out_November_Rally_Despite_Plunge_in_Inventories

Commodities – Energy

Crude Oil Wipes Out November Rally Despite Plunge in Inventories

Crude Oil (WTI) - $80.91 // $0.47 // 0.58%

Commentary: Crude oil fell for a fourth day in a row despite a steep drop in U.S. crude oil inventories. The move in crude was interesting considering that U.S. equity markets were virtually flat the entire day. Crude was down between $0.50 and $1.00 before the inventory report, proceeded to rally up to unchanged after the numbers, and then sold off for the rest of the day to end down $1.90, or 2.31%, to $80.44. Crude has virtually wiped out this month’s entire run.

We can only speculate as to why crude underperformed to such a degree on Wednesday. OPEC could be keeping a lid on prices by raising production, or the impact from the diesel-related spike in demand from China could be abating as imports make their way to the region. We have seen crude oil imports into the U.S. plunge in recent weeks, with distillate imports in particular virtually disappearing, which could be an indication that supply has simply been shifted from North America to Asia.

As we said in our latest report on petroleum inventories: “Imports remain extremely depressed and fell further last week to the lowest since 1997. Such a low level of imports is likely a function of weak demand rather than tight supply. U.S. inventories were and still remain extremely elevated—especially on the product side. Thus, we have seen refineries cut production to bring stocks to more normal levels. Imports fell as refineries demanded less crude. Furthermore, a spike in diesel demand in China has led to premium pricing in that part of the globe, which is another factor that has led to reduced volumes coming into the U.S. Indeed, we have seen U.S. distillate imports completely evaporate, but even so, stocks remain more than ample.”

Technical Outlook: Prices have continued to tumble, with the bears just a hair away from challenging the horizontal barrier at $79.49. A break below this boundary exposes a rising trend line set from May’s spike low, now at $77.04. Near-term resistance remains at $83.27.

Gold_Falls_for_a_Fourth_Day_but_Rebounds_Overnight

Commodities – Metals

Gold Falls for a Fourth Day but Rebounds Overnight

Gold - $1348.20 // $12.20 // 0.91%

Commentary: It’s been awhile since gold fell four days in a row, but that was the case on Wednesday as the metal shed another $3.70, or 0.28%, to settle at $1336. It was a day of pause for the rally in the U.S. dollar as the currency fell just slightly versus most of its rivals. Tomorrow we will publish our weekly Gold – Forex Correlations report and all indications are that the numbers will show that this week was another in which gold and the dollar held true to their inverse relationship.

Now that gold prices are $90 below last week’s all-time highs, some may be anxious to dip their toes into the water. We would be extremely cautious here, however, for the potential downside remains significant. Consider that it was less than two months ago that gold first surpassed $1300. Meanwhile, gold ETF holdings have risen only slight over the last five months.

Technical Outlook: Prices have stalled above support at $1322.39, the 38.2% Fibonacci retracement for the 7/28-11/9 advance. Near-term resistance stands at a previously broken rising trend line set from late July, now at $1358.96. Alternatively, renewed selling pressure that takes prices through current support will target the 50% Fib at $1290.81.

Silver - $26.18 // $0.54 // 2.11%

Commentary: Silver again bucked the trend in gold prices to advance $0.16, or 0.62%, to settle at $25.63. From peak-to-trough silver had fallen from $29.36 to $24.99, or 15% in a little over one week. A bounce is to be expected, but given how frothy silver remains, it will likely be some time before prices make another significant run higher.

The gold/silver ratio fell to 51.5, but remains higher than levels earlier this month near 50. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance while a lower ratio indicates silver outperformance).

Technical Outlook: Prices are testing higher through resistance at 26.10, the 50% Fibonacci retracement of the 10/22-11/09 upswing. A daily close above this juncture exposes the 38.2% Fib at $26.87. Near-term support stands at $25.33, the 61.8% level, with a reversal lower through this boundary exposing the 76.4% Fib at $24.37.

Published in Forex News

Contributed By: DailyFx

 * Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation
* Euro Buys Time with Irish Bailout Rebuke but Region-Wide Troubles will Force the Issue
* British Pound Traders Find Little Confidence in Employment Figures, What about Deficit Progress?
* Canadian Dollar Prepares for Capital Flows, Growth Forecast and BoC Quarterly Review
* New Zealand Dollar Boosted by Accelerated Inflation and Improved Consumer Confidence

Dollar Rally Cools Post Breakout as Investors Mull Financial Cracks, US Inflation

Most experienced traders are familiar with the concept that a significant breakout is often followed by a short-term correction whereby the market makes it ultimate decision to catalyze the new-found trend or reverse the move to draw price back into a comfortable trading range. Both the dollar and risk appetite trends are currently in this transition period. Looking for the logic behind this pause during a period that many would think is a clear signal to plow into a new trend, there is both a technical and fundamental motivation. From the technical side of things, former support is often treated as new resistance (and vice versa) as the initial breakout flashes through momentum by clearing nearby entry and stop orders. As this accelerant is burnt off, the many speculators used to the old trend will attempt to jump back in on what they think is a ‘cheap’ price. Yet, as it becomes evident that the market is struggling to overtake that former floor, reality begins to set in and the eager traders capitulate. That said, a false breakout is the scenario where there is enough participation to push beyond the technical boundary and put the market back on its original path. We can see that most market benchmarks are in the process of determining which scenario will prevail. The Dollar Index, is pulling back towards the five-month trend and 50-day moving average that it just recently overtook. Reflecting on a broader theme, the S&P 500 marked a very tentative and modest bounce after posting its biggest drop in months to break a preternaturally consistent, two-month bull trend.

The fundamental aspect of this trading phenomenon is unique to our current situation. There are still very serious reasons to doubt the outlook for economic activity, financial stability and the prospect for returns; but it is difficult for market participants to throw in the towel on the impressive trend of the past few months. Since the beginning of September, considerable leverage was dedicated to taking part of the steady climb ahead of the Fed’s second stimulus program. Eventually, investors in equities, corporate debt and other risky assets will submit to the troublesome forecast; but there is currently a lull that is allowing traders to ignore reality. The most prominent threat, European financial stability, has recently found a temporary period of calm after Ireland refused stimulus at Tuesday’s EU meeting. However, this doesn’t improve the situation in the country’s banking system. In fact, it merely postpones a solution while financing costs across the region continue to balloon and the lines of support start to breakdown. Another building threat to risk appetite trends exists in China’s threats to curb inflation. This may seem a prudent economic policy; but the side effect is curbed speculation in one of the market’s favorite trading destinations.

The US is providing its own contribution to the global risk scheme. Adding credence to the Fed’s decision to add a second round of stimulus this month, the core measure of annualized CPI growth slowed to its weakest pace on record at 0.6 percent. This doesn’t really diminish the dollar any further because the expansionary policy has been largely priced in at this point; but it does remind us that there are lasting economic and market troubles related to deflation or stubborn disinflation. The data that we should pay more attention to is the housing starts data. Construction on new developments plunged 11.1 percent to its second lowest level on record owing largely to multi-home dwellings. Yet, this data should be put into context of the larger US housing sector problems. Not only is construction activity anemic; the wealth in home prices is further curbing confidence, a backlog of reposed properties is threatening to keep this sector from contributing to a recovery and ongoing issues with foreclosures threaten to trigger the financial mess tied up in real estate-based mortgages. US housing may pose a second wave crisis.

Related:Discuss the Dollar in the DailyFX Forum, John’s Analyst Picks: AUDUSD and AUDCHF offer Short-Term Setups in Eerily Quit Markets

Euro Buys Time with Irish Bailout Rebuke but Region-Wide Troubles will Force the Issue

Have conditions improved in Europe? It would seem so with the euro slowly retracing its steps after its significant decline of the past week. However, this tentative recovery is more accurately attributed to a pause in more pervasive financial concerns. Ireland is still the most immediate threat to the future of the shared currency. Finance Minister Lenihan’s decision to snub financial support from the EU at the group’s monthly meeting late Tuesday has not improved the situation. In fact, the uncertainty increases the risk for instability for the broader region. However, as the market awaits the EU, ECB and IMF’s assessment of the country’s ability to stabilize its own banking sector, there is time for reflection.

Yet, the market may not simply wait for policymakers to give them the official assessment of the market’s health. It was reported Wednesday that LCH.Clearnet – one of the largest clearing houses for European fixed income – raised its margin on Irish government debt by 15 percent for the second time in a week. The steps to smother confidence are progressive in this way. In the meantime, Ireland isn’t our only concern. Following up on its threat to withhold its next tranche of support to bailout Greece, Austrian officials said the EU was pushing back its December payment to January. Elsewhere, Portugal struggled in its recent bond auction; and it was rumored that the ECB had to buy Portuguese and Greek bonds.

British Pound Traders Find Little Confidence in Employment Figures, What about Deficit Progress?

Even though risk appetite took a slow turn north, the British pound was still struggling to gain traction. This was particularly surprising given a surprise decline in jobless claims through October; though the noncommittal BoE minutes help offset that fundamental marker. Perhaps speculation of a future stimulus program will carry more weight as we look ahead to public borrowing figures.

Canadian Dollar Prepares for Capital Flows, Growth Forecast and BoC Quarterly Review

The Canadian dollar has merely been following risk appetite and US dollar-based trends the past few days; but perhaps the currency’s own fundamental backdrop will carry more weight over the coming 24 hours. On the docket for Thursday are the Leading Indicators index and capital flows figures. For actual market influence though, the BoC’s quarterly review will likely carry the most weight for policy and growth forecasts.

New Zealand Dollar Boosted by Accelerated Inflation and Improved Consumer Confidence

It certainly helps that risk appetite trends were bullish; but the New Zealand dollar found an extra push through its own fundamental docket early Thursday morning. For interest rate hawks, the 1.2 percent reading on the 3Q producer price index output doesn’t necessarily promise future hikes; but it sets up the CPI numbers for the occasion. Also, consumer confidence would show relief in a bounce from a year low.

Published in Forex News

Contributed By: DailyFx

 USD_Graphic_Rewind_Easing_Concerns_Over_Ireland_Lift_Risk_Appetite_Pressure_Buck

The dollar index suffered its first daily loss in the last five sessions on Wednesday as stabilizing equities lifted risk appetite and fears began to ease regarding Ireland’s obstinacy to accepting an aid package. The index started the day brightly enough as concerns regarding Ireland’s ability to manage its financing needs alone put the euro under pressure and lifted the buck. However, risk appetite was given a boost early in the North American session from solid consumer prices data and rising equities putting the greenback under the cosh. The index managed to pare its loss a tad into the NY close as US stocks gave back their gains as financials slipped dragging down the broader sentiment. But the dollar got a further knock late in the day as expectations started to rise that Ireland would in fact accept aid from the EU and IMF, lifting the euro once again. The easing of sovereign debt fears early in Asia helped Chinese and Japanese stocks to consolidate after the previous sessions weakness, keeping the pressure on the buck.

Looking ahead, as we approach the European open the index is under mild pressure, but at present this looks little more than consolidation after solid gains over the past couple days. We will only begin to be concerned about the door being opened to further losses in the index if we breach the 78.00 level, which is still some ways off. We therefore maintain our bullish slant in the index and favour this up-move to continue up above the psychologically important 80.00 level and encounter some resistance around 81.00.

Published in Forex News

Contributed By: DailyFx

 The arrival of EU and IMF teams in Dublin to discuss the possibility for a bailout for Ireland, has undoubtedly helped to prop the Euro a bit, as market sentiment improves on the expectation for a resolution. However, we would suggest that the main reason for the latest rebound in the Euro, and currencies across the board has been more a function of the US economy.

The latest batch of data released on Wednesday has taken on more meaning in light of the Fed’s ultra-accommodative monetary policy, which has resulted in large injections of liquidity into the markets over the past several months. With the Fed already implementing a second round of quantitative easing, there are many who now fear that the central bank will need to be extremely careful going forward as there are serious risks of long-term inflation should this accommodation continue to be so aggressive.

The Fed is well aware of this danger, and as such, has made it very clear in its language that while they are more than comfortable with their quantitative easing approach, at this point, they would like to wait to see how economic data comes out before making additional decisions. Clearly, softer than expected CPI and weaker housing starts do not help the case for a reversal in monetary policy, and given the disappointing batch of data, this has only helped to reinforce the need for current quantitative easing measures.

We have therefore seen a sell-off in the US Dollar since the release of this data, as QE bulls have found comfort in the idea that the Fed is less likely to alter its policy. The US Dollar had benefited in recent days from better economic data and comments out from various Fed officials that had suggested the need to soon rein in current monetary policy. However, data like we saw yesterday threatens the USD recovery, and only helps to justify additional selling in the Greenback.

We are not comfortable with this reaction, and instead remain in the camp that believes the US economy is on a path to recovery and the Fed needs to start thinking about reversing its QE policy and worrying more about longer-term inflationary threats. Nevertheless, we can not ignore the will of the markets, and in light of these latest developments, we would expect to see more USD selling over the coming sessions. We will be on the lookout for opportunities to buy the buck into dips.

Looking ahead, the Swiss trade balance is due at 7:15GMT, followed by Eurozone current account at 9:00GMT. UK public finances and public sector net borrowings are then out at 9:30GMT, along with UK retail sales. Swiss ZEW is then out at 10:00GMT, along with the Eurozone OECD economic outlook. UK CBI trend total orders then caps things off for the European calendar at 11:00GMT. The improved risk appetite has helped to fuel a decent recovery in US equity futures and commodity prices.

Published in Forex News

Contributed By: DailyFx

 Europe Session Key Developments

- Ireland's Hold Out Will Lead to Significant Volatility

- British Officials Said They Would Back Support for Ireland to Prevent Bank Woes from Reaching the U.K. Market

European Equities rose modestly on Wednesday as investors hoped that European Union officials would devise a more definitive plan to cope with the region’s debt crisis though all they got was a pledge of support from Britain’s Finance Minister. Concerns that Ireland will not be able to pay the cost of rescuing its banks – in trouble largely because of the real estate boom collapse – has worsened Europe’s government debt crisis. Markets have pushed up borrowing costs for other troubled nations like Portugal and Spain, threatening to destabilize the common Euro currency. Officials from the International Monetary Fund and the European Central Bank will meet in Dublin on Thursday to further analyze the situation with Ireland’s troubled banking sector.

FTSE100 / 5692.56 / +10.66 / +0.19%

U.K. jobless claims unexpectedly fell in October, suggesting that the labor market is recovering momentum as the prospect of a record budget squeeze looms. U.K. Stocks rose slightly led by Experian PLC, the world’s biggest credit-checking company, which jumped 6.3% to 748 pence after reporting that first-half net income rose to $260 million up from $249 million a year earlier. (its biggest gain since April 2009). GlaxoSmithKline PLC (Glaxo) rose 2.4% to 1,243 pence after winning backing from an advisory panel of the U.S. Food and Drug Administration for the company’s Benlysta lupus drug. ICAP PLC, the world’s biggest interdealer broker, rose 1.3% to 472 pence after reporting that first-half pretax profit rose 2% to $292 million as revenue increased by 9%.

CAC 40 / 3792.35 / +29.88 / +0.79%

French stocks also reported gains after the CAC’s biggest drop in 3 months. Soitec SA surged 6.5% to 8.68 Euros after the supplier to the chip industry reported a smaller first-half net loss than expected citing sustained demand from the semiconductor industry. Zodiac Aerospace SA rose 2.2% to 52.78 Euros as the biggest maker of airplane seats in Europe may be taken over by a hostile bid by Safran SA (Safran’s shares slid 1.4% to 21.53 Euros).

DAX / 6700.07 / +36.83 / +0.55%

German stocks advanced on the general sentiment across Europe as the EU started work on a possible aid package for Ireland. Infinenon, Europe’s 2nd biggest chipmaker, rose 1.4% to 6.31 Euros as RBS raised its recommendation on the stock to “buy” from “hold” continuing Infineon’s gains made yesterday on positive profit reports. MAN SE, Europe’s 3rd largest truckmaker, jumped 2.5% to 88.31 Euros while Lufthansa Airlines rose 2.3% to 15.98 Euros. There is still uncertainty in the market with a risk of sideways trading between 6,650 and 6,750 in the DAX index.

IBEX 35/ 10189.30 / +93.90 / +0.93%

Spain’s IBEX 35 index rose 0.9% to trim losses of 2.5% yesterday. Cie Automotive added 2.1% to 4.19 Euros after the Spanish car-parts maker agreed to sell its Mexican steel wheels business to Brazil’s Iochpe-Maxion SA for $3.2 million. Fersa Energias Renovables SA gained for the first time in 4 days gaining 2.3% to 1.11 Euros after Goldman Sachs changed the stock’s status from “neutral” to “sell.”

S&P/MIB / 20639.08 / +76.01 / +0.37%

Pininfarina SpA surged 22% to 3.51 Euros as the designer of sports cars gauges interest for an acquisition by other firms like Magna International Inc. Tenaris SA rose 4.1% to 16.17 Euros paring yesterday’s 5.4% decline as European basic-resource shares climbed 0.8% today, the 5th best performance among 19 Industry groups in the Stoxx Europe 600 Index.

Published in Forex News

Contributed By: DailyFx

 Euro_Risk_Appetite_Climb_As_Ireland_Intimates_It_Will_Tap_Funds_Offer

The euro spiked higher as Ireland’s central bank Governor said that he expects Ireland to ask for assistance from the EU and IMF. He said that the figure could run into the tens of billions of euros and he acknowledges that banks must hold additional capital. Speculation has been rife that Ireland will ask for aid since early in the Asia session and the confirmation has seen the euro spike to fresh highs as concerns over Ireland’s ability to handle its debt alone are finally put to rest.

In recent days the euro has been under significant pressure with Irish obstinacy to requesting funds said to have made ECB President Trichet “mad” (Irish Times).Irish officials had said that funding is available through 2011 and it is fully capable of handling higher borrowing costs. In an abrupt U-turn a deal now seems to be in the offing, Ireland’s central bank Governor stressed that getting the terms and getting conditions of any assistance right is essential. Adding that if an agreement is reached it will be a loan and not a bailout, noting that he is confident a package will be agreed upon as officials would not have arrived in Dublin if there was no hope for consensus. The government initially wanted a clear distinction between an emergency bank aid and financial help for the State, there is now a reluctant acceptance that the former will have to be drawn by the government on behalf of the institutions.

Published in Forex News
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