Month: April 2010

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3255 level and was capped around the $1.3420 level.  The common currency continues to weaken on worsening conditions in Greece.  The European Union is now estimating that Greece’s 2009 deficit is worse than previously reported and Moody’s Investors Service downgraded the government’s debt ratings to A3 from A2.  Many dealers expected a greater credit downgrade. Credit default swaps on Greek five-year debt surged 91 basis points to a record 577 and ten-year bond yields touched 9%, the highest level since 1998.  All of these factors render it increasingly likely Greece will be forced to accept a bailout from eurozone partners and/ or the International Monetary Fund.  Greece may be forced to reduce or postpone payments to bond investors for now.  Data released in the eurozone today saw April PMI services print at 55.5, up from the prior reading of 54.1, while EMU-16 consumer confidence improved to -15 in April from -17.  It was also reported that the eurozone’s debt-to-GDP ration escalated to 78.7% at the end of 2009 from 69.4% at the end of 2008.  In U.S. news, data released today saw the March headline producer price index climb 0.7% m/m and 6.0% y/y while the core rate was up 0.7% m/m and 0.9% y/y.  Also, weekly initial jobless claims fell to 456,000 from the revised prior reading of 480,000 while continuing jobless claims fell to 4.646 million from the prior reading of 4.686 million.  Moreover, March existing home sales were up 6.8% m/m to an annualized 5.35 million units and the February house price index was off 0.2% m/m.  President Obama called for a financial overhaul that would offer the “strongest consumer protection ever.”  Obama’s plan calls for a ban on future bank bailouts.  Euro bids are cited around the US$ 1.3175 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥93.35 level and was supported around the ¥92.75 level.  There is increasing speculation the BoJ will raise its outlook for the economy and prices next week amid positive improvements in certain economic measures including the export sector, the unemployment rate, and consumer confidence.  The Democratic Party of Japan reported it will likely call for an inflation target for the central bank in this year’s election platform.  It is likely legislators will try and prompt the central bank to seek inflation of up to two per cent.   The International Monetary Fund this week called on Japan to enact a “credible” medium-term fiscal plan.  Bank of Japan Governor Shirakawa warned complacency is the “most dangerous risk” for central banks and said “over-confidence” damaged Japan and the U.S.  Finance minister Kan said concerns over Japan’s terrible debt situation will ease when a new fiscal plan is issued.  Data released overnight saw March supermarket sales off 6.6% y/y.  The Nikkei 225 stock index lost 1.27% to close at ¥10,949.09.  U.S. dollar offers are cited around the ¥96.85 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥123.30 level and was capped around the ¥125.15 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥142.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.00 figure. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8264 in the over-the-counter market, down from CNY 6.8275. People’s Bank of China sold bills at lower yields for the first time in fifteen months, evidencing the banking system’s large surplus of cash. Many China-watchers believe China may allow the yuan to appreciate at any time between now and the end of the quarter.

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5340 level and was capped around the $1.5470 level.  Data released in the U.K. today saw March retail sales climb 0.4% m/m and 2.2% y/y while the March public sector net cash requirement grew to £25.8 billion from February’s level of £8.0 billion.  Also, March public sector net borrowing printed at £23.5 billion, up from the prior reading of £9.7 billion.  Additionally, March mortgage approvals grew marginally to 52,000 from the prior reading of 48,000 and the March M4 money supply expanded 0.1% m/m and 3.5% y/y.  Minutes from Bank of England Monetary Policy Committee’s April meeting were released yesterday and they revealed a unanimous vote to keep interest rates unchanged and the central bank’s asset purchase plan unchanged at £200 billion.  Traders are talking about a surge in the polls by the Liberal Democratic Party and the likely impact this will have on the 6 May General Election.  Many political pundits believe the contest will result in a hung Parliament and some now say the general election is too close to call with Cameron perhaps still holding a slight lead over Brown.  Cable bids are cited around the US$ 1.5140 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.8630 level and was capped around the £0.8695 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0805 level and was supported around the CHF 1.0670 level.  Swiss National Bank and Swiss regulators announced new regulations today that mandate UBS and Credit Suisse to hold larger amounts of reserves to defend against crisis scenarios.  Data released in Switzerland today saw the March trade balance expand to CHF 2.01 billion from the prior reading of CHF 1.29 billion while the April ZEW expectations survey fell back to 53.4 from 53.8.  Dealers continue to cite talk that Swiss National Bank may be intervening by bidding the euro/ franc cross higher.  U.S. dollar offers are cited around the CHF 1.0920 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4320 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6580 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

U.S. existing-homes sales data rebounded in March after three straight months of decline, according to the monthly report produced by the National Association of Realtors (NAR). The NAR report showed that existing-home sales including single family homes, co-ops and townhouses rose by 6.8 percent in March to a seasonally adjusted annual rate of 5.35 million units. February’s existing-homes sales data had decreased by a revised 0.8 percent to a 5.05 million home rate.

On an annual basis, March’s existing-home sales increased by 16.1 percent over the March 2009 level. Market forecasters had predicted the sales data would rise by 5.3 percent in March to a 5.29 million unit sales pace.

NAR chief economist Lawrence Yun commented in the report about the rebound in sales figures, “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

Sales in the Northeast increased by 6.0 percent in March while the Midwest sales rose by 7.2 percent. The West saw its existing-home sales rise by 6.6 percent and sales gained by 7.1 percent in the South. On an annual basis, the Northeast leads the increases above the March 2009 level with an increase of 25.4 percent with the South (13.9%), West (14.0%) and Midwest (15.5%) all showing rises on an annual basis.

Weekly Jobless Claims fall

U.S. weekly jobless claims decreased in the week that ended on April 17th, according to a release by the U.S. Labor Department today. New jobless claims fell by 24,000 workers to a total of 456,000 unemployed workers. The 4-week moving average of unemployed workers increased by 2,750 workers from the previous week to a total of 460,250.

Market forecasts were expecting jobless claims to fall to 450,000 workers following the prior week’s 480,000 claims.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending April 10th also decreased for the week. Continuing claims fell by 40,000 workers to a total of 4,646,000 unemployed workers. The 4-week moving average of continuing claims dropped by 5,500 workers to a total of 4,643,750.

Producer Prices gain more than expected

The Producer Price Index, released in a separate report by the Department of Labor, rose more than expected in March as food and energy costs increased and boosted inflation on finished goods. Producer prices increased by 0.7 percent in March following a decrease of 0.6 percent in February and an increase by 1.4 percent in January. The annual rate of increase for March showed that producer prices were 6.0 percent higher than March of 2009 after February’s annual rate registered a 4.4 percent increase.

Market forecasts were expecting monthly producer prices to gain by 0.5 percent and the annual rate of increase to register 6.0 percent.

Core producer prices, excluding food and energy prices, rose by 0.1 percent in March following a 0.1 percent rise in February and matched market expectations of a 0.1 percent gain. On an annual basis, core producer prices advanced by 0.9 percent in March compared with an increase of 1.0 percent in February and matched expectations.

Helping to contribute to the increased producer prices in March was the cost of consumer foods which advanced by 2.4 percent for the month while the index for finished energy goods rose by 0.7 percent.

FOREX: US Dollar higher versus Euro, Majors. US Stocks lower

The U.S. dollar has been on the rise in the forex markets today while U.S. stocks have traded lower as investor risk has fallen to the wayside in the U.S. trading session today. The dollar has increased higher today versus the euro, Swiss franc, British pound, Japanese yen and the Canadian dollar while falling to the New Zealand dollar and trading almost unchanged against the Australian dollar, according to currency data by Oanda at 2:16 pm EST.

The Greece situation put risk aversion in the markets as Moody’s downgraded Greece’s sovereign debt (from A3 to A2)  and it was also released that Greece’s budget deficit of last year was higher than previously estimated. The Greece budget deficit of 2009 is now estimated to be 13.6 percent of GDP compared with the previous estimate of 12.7 percent of GDP. The latest news sent the euro sharply lower against the dollar, touching its lowest level in almost a full year at the 1.3260 exchange rate.

The U.S. stock markets, meanwhile, have had a negative trading session today with the Dow Jones falling by over 25 points, the Nasdaq decreasing over 1 point and the S&P 500 showing over a 3 point shortfall. Oil has edged lower to the $83.45 per barrel level while gold has been lower by $5.70 to the $1,142.50 per ounce level.

New York Financial Press
Apr. 22, 2010. 01:01 PM EST

04/22/10 The euro continued its slide this session following growing concerns over Greece deficit.

By Fast Brokers – The Aussie is being dragged lower today due to considerable weakness in the Euro.  Greek bond yields have hit an all-time high and EU budget deficits are widening.  The deteriorating fiscal situation in the EU has stirred uncertainty all around the risk trade as the Cable and gold also retreat.  However, the Aussie has managed to stay in a somewhat respectable positive due to its relative strength stemming from the RBA’s hawkish monetary stance.  Australia has released little economic data this week, allowing the Aussie to move according to its positive psychological forces.   Stevens will speak tomorrow and it will be interesting to see whether he maintains the positive sentiment seen in the RBA’s recent meeting minutes.  If so, the Aussie should hold onto its relative strength.  However, the EU, UK, and U.S. will likely hog the spotlight.  That being said, investors should keep an eye on the data wire as the European trading session rolls around.  If the data should turn sour this could weigh on the risk trade as a whole, Aussie included.  Additionally, corporate earnings will continue to flood in and results should have a noticeable impact on the greenback.

Technically speaking, the Aussie faces technical barriers in the form of 4/21, 4/15 and 4/12 highs.  Additionally, the psychological .93 and .94 levels could serve as psychological obstacles over the near-term.  As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with 4/13 and 4/19 lows.

Price: .9258
Resistances: .9272, .9282, .9292, .9306, .9316, .9329
Supports: .9257, .9245, .9234, .9222, .9209, .9192
Psychological: .93, .94, .92, April highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Gold was unable to break through its highly psychological $1150/oz level and the precious metal is back to the $1140/oz area.  Conditions in the EU certainly aren’t helping gold’s cause right now.  Greek bond yields hit an all-time high as EU budget deficits widen.  Uncertainty in the EU has led investors away from the risk trade and towards the dollar, a negative for gold due to correlative forces.  U.S. unemployment claims remain above 450k and that isn’t benefitting the risk trade either.  Meanwhile, investors are awaiting U.S. existing home sales.  If today’s housing data comes in strong this could ebb the risk-averse flows.  On the other hand, weak existing home sales could boost the dollar further and weaken gold.  The data train will keep on rolling tomorrow with key releases from across the globe, including UK prelim GDP, Germany’s Ifo business climate, and durable goods figures.  Additionally, the U.S. will provide new home sales, filling out the housing picture.

Technically speaking, gold has managed to avoid a retest of April 21 highs so far, a positive development for the near-term.  Speaking of which, gold has 4/21, 4/20, and 4/19 lows serving as technical cushions along with multiple uptrend lines.  As for the topside, gold faces multiple downtrend lines along with the psychological $1150/oz level.

Present Price: $1139.95/ oz
Resistances: $1140.70/oz, $1141.47/oz, $1142.43/oz, $1143.11/oz, $1144.07/oz, $1145.03/oz
Supports: $1139.54/oz, $1138.87/oz, $1138.20/oz, $1137.33/oz, $1135.79/oz, $1134.83/oz
Psychological: $1150/oz, $1140/oz, $1130/oz, April highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Another day same story, the USD/JPY is hugging 93 as it continues another one of its common tight range periods.  It’s interesting the USD/JPY is so calm despite high volatility in the EU region.  However, investors should keep in mind that the USD/JPY has the potential to jolt to life, particularly if there is a technical game changing move in another major dollar pair.  Hence, investors should keep an eye on activity in the Euro and whether the EUR/USD sacrifices key support levels.  Meanwhile, investors are waiting on U.S. existing home sales.  Weak U.S. housing data could weigh on the USD/JPY, and vice versa.  U.S. unemployment claims made little improvement and today’s earnings releases have disappointed, taking a bit of steam out of the USD/JPY’s upward momentum.  Japan’s trade balance printed in line with estimates as export demand improves.  On another note, the IMF mentioned that Japan may need to loosen liquidity further over the medium-term in order to counter deflation, echoing the DPJ’s sentiment.  This is a positive development for the USD/JPY, yet clearly isn’t having much of an impact thus far.  Governor Shirakawa will address the public tomorrow and statements with BoJ members carry the potential to impact the Yen.  However, the attention will likely remain focused on the EU, UK and U.S. with key data releases from all three.  Hence, the week could end on a volatile note.

Technically speaking, the USD/JPY faces technical barriers in the form multiple downtrend lines along with intraday, 4/14, and 4/7 highs.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 3/29, and 4/19 lows.  Additionally, the psychological 92 level could continue to serve as a psychological cushion should it be tested.

Present Price: 93.10
Resistances: 93.10, 93.20, 93.38, 93.51, 93.64, 93.75
Supports:  92.91, 92.81, 92.71, 92.57, 92.47, 92.37
Psychological: .92, .93, April highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is taking a step lower right now along with the rest of the risk trade as the Euro tumbles in the wake of Greek bond yields hitting 8.2%+.  Greece’s budget deficit came in higher than anticipated, placing even more pressure on the government to seek outside help.  Additionally, the overall EU budget shortfall as hit its highest level since the formation of the union over 10 years ago.  The fear of contagion is understandably delivering a blow to the risk trade and the Cable is no exception.  UK retail sales came in 3 basis points below analyst expectations, giving investors little to cheer about.  However, the Cable is still holding up relatively well as it derives strength from yesterday’s impressive CCC figure.  As for the U.S., weekly unemployment claims hung above 450k and PPI came in hotter than anticipated, encouraging investors to pick up the dollar in the process.  Meanwhile, investors should keep their eyes on the EUR/USD and monitor its ability to hold 1.33 and April lows.  If the currency pair tumbles below key supports this could drag the whole market lower.  Investors are also awaiting U.S. existing home sales.  If today’s housing data also disappoints this could fuel risk-aversion.  The data wire won’t slow tomorrow with important releases from around the globe.  In fact, the UK will print Prelim GDP.  Considering the improvements in employment and manufacturing, it wouldn’t be surprising to receive a solid GDP number, which could help buoy the Cable.

Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with 4/21,4/20, and 4/19 lows.  Additionally, the psychological 1.53 area could serve as a psychological cushion should it be tested.  As for the topside, the Cable faces multiple downtrend lines along with intraday, 4/12, and 4/15 highs.

Present Price: 1.5385
Resistances: 1.5388, 1.5404, 1.5419, 1.5435, 1.5453, 1.5469
Supports: 1.5371, 1.5354, 1.5341, 1.5325, 1.5310, 1.5285
Psychological: 1.55, 1.54, 1.53, 1.52, April highs and lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD is getting hammered after moving higher during the Asia trading session.  Greek debt continues to set new all-time highs and is leaving beyond the 8% threshold.  The yield is rising today after Greece reported a budget deficit of 13.6% of GDP, higher than analyst expectations.  Additionally, the budget shortfall in the EU region hit an all-time high of 6.3%.  This ignites speculation of contagion and is clearly weighing on the Euro as the currency slides against the Pound.  The risk trade as a whole is taking a hit and extending intraday losses after U.S. Unemployment Claims remained above 450k.  Nokia and QCOM earnings disappointed, souring the positive earnings so far this week.  To top the cake, U.S. PPI printed stronger than anticipated, giving investors just another reason to favor the Dollar over the Euro.  The EUR/USD is now approaching key supports as a result, and it will be interesting to see whether the currency pair can withstand a test of previous April lows.  Meanwhile, investors are casting aside more positive data from the EU region as Flash PMIs impressed.  This adds onto the encouraging consumer confidence data we saw earlier this week.  Hence, fiscal fears are dominating and the EUR/USD could continue to get punished until negative psychological forces recede.  The data wire will stay active tomorrow as the EU releases Germany’s Ifo business climate index.  Additionally, the U.S. will print its DGO and new home sales figures, meaning the trading week could end with a surge in activity.

Technically speaking, the EUR/USD is testing the patience of key uptrend lines now, particularly the 1st tier running through April lows.  Therefore, 1.33 could prove to be a key psychological battleground.  As for the topside, downtrends are accumulating and the EUR/USD also faces technical barriers in the form of 4/8, 4/9, and intraday highs.

Present Price: 1.3339
Resistances: 1.3348, 1.3359, 1.3366, 1.3375, 1.3381, 1.3390
Supports:  1.3337, 1.3330, 1.3324, 1.3314, 1.3306, 1.3296
Psychological: April highs and lows, 1.34, 1.33

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Finexo.com

Past Events
• GBP Claimant Count Change, out at -32.9K versus expected -7.6K, prior -40.1K (revised)
• GBP Unemployment Rate, out at 8.0% versus expected 7.8%, prior 7.8%
• GBP Monetary Policy Committee meeting minutes
• CAD Wholesale Sales, out at -1.2% versus expected 1.0%, prior 2.4% (revised)

Upcoming Events
• USD PPI m/m (1230 GMT)
• USD  Unemployment Claims (1230 GMT)
• USD Existing Home Sales (1400 GMT)
• EUR ECB President Trichet addressing European Central Bank Conference (1100 GMT)
• GBP Public Sector Net Borrowing (0830GMT)
• GBP Retail Sales m/m (0830GMT)
• CAD Bank of Canada Monetary Policy Report (1430 GMT)

Market Commentary
Yesterday the pound rose against both the euro and the US dollar as UK claimant counts fell more than economists forecast in March, giving a boost to Prime Minister Gordon Brown as he fights the tightest UK general election for more than 30 years. The currency gained 0.31% against the US dollar to close at GBP 1.54081. It rose by 0.66% against the euro to close at GBP 0.86861.

The number of people collecting jobless benefits fell 32,900 from February to 1.54 million, the Office for National Statistics said yesterday. A drop of 10,000 had been expected. In February, the number of jobless claims fell by 40,100 instead of the 32,300 drop originally reported. The decline was the largest since June 1997. In March, the claimant count rate fell to 4.8%, the lowest since June last year, from 4.9%.

A separate measure of unemployment climbed to a 16-year high. The 8% unemployment rate, up from 7.8% in the previous period, compares with 9.7% in the US and 10% in the 16-nation euro zone.

Polls published Tuesday showed Labour slipping into third place after a surge in support for the Liberal Democrats following the first debate on April 15th. The results mean Labour could win the most seats in Parliament and remain in power with the support of the Liberal Democrats.

Sterling has been weakened by market speculation that the general election may produce no clear majority in Parliament. A minority government would have difficulty pushing through measures to tackle the budget deficit, which currently rivals that of Greece, at almost 12% of GDP.

The report may fuel speculation that the Bank of England will have to raise interest rates at a faster pace than previously thought as inflation climbed to 3.4% last month. Some central bank officials showed concern at the prospect of a prolonged bout of faster inflation when they met earlier this month, according to the minutes of their meeting published yesterday. The central bank has kept its interest rate at 0.5% since March 2009 to bolster growth.

U.K. annual consumer-price growth accelerated to 3.4% last month, according to data released on Tuesday, pushing close to the 14-month high of 3.5% reached in January. The Bank of England has a mandate to target inflation at 2% and keep it within 1 percentage point of that goal.

Bank of England officials, who are trying to balance fostering the economic recovery and the threat of accelerating inflation, have suspended comment on policy before the May 6th general election as Prime Minister Gordon Brown tries to win over voters on his record of managing the economy.

In Europe yesterday the Greek government’s cost of borrowing hit a new high as talks on the rescue plan began. The interest rate on 10-year government bonds hit 8.3% – the highest level since the euro was introduced. Rates rose as it became clear that talks over the aid package may not be finished until days before a multi-billion-euro loan is due for repayment.
Many observers now feel it will be a question of when not if, Greece needs the aid.
Greece’s finance ministry said the talks with the European Commission and the IMF would take about two weeks, with a joint text expected to be issued on around May 15th. On May 19th, Greece is due to repay investors an 8.5 billion euro bond.

In a statement on Tuesday, Greece’s finance ministry, said: “The discussions concern a three-year program of economic policies… which can be supported with financial assistance from euro zone members and the IMF should Greek authorities decide to request the activation of the mechanism.”

The talks, will discuss the precise terms, conditions, and interest rates that would apply if Greece asks for the aid. If all sides can agree to the terms required it should clear the way to a quick payout of up to 45 billion euro on offer from the EU and IMF.

Earlier this week Athens raised almost 2 billion euro by selling three-month Treasury bills. However, even though the fund-raising was successful the interest rate was 3.65%, more than twice the level at which Greece raised similar short-term funds in January. Greece has said its priority is to raise much-needed funds on the financial markets. But the higher the yield on Treasury issues, the bigger Greece’s debt-burden becomes.

Euro zone partners have offered over 30 billion euro in aid with a further 10 billion euro to come from the IMF. However speculation persists that even this might not be enough. On Tuesday, Axel Weber, a member of the European Central Bank governing council, denied reports that Greece might need as much as 80 billion euro to avoid default.
The euro fell against the pound and the US dollar yesterday. It dropped 0.35% on the UD dollar to close at EUR 1.33870. It fell 0.66% against sterling to close at GBP 0.86861.

USD/EUR Chart

Yesterday in Canada brought news that wholesale sales unexpectedly declined in February, the first drop in four months, led by automobiles and machinery. Sales declined 1.2% to C$43.8 billion (US$43.7 billion) according to figures released by Statistics Canada. Economists had expected a 1% increase.

Four of the seven wholesale categories recorded decreases in February. Motor vehicle sales fell 5.3%, the first decline since August. Machinery, equipment and supplies sales fell 2.8% while personal and household goods sales fell 1.5%.
Wholesale sales have gained 8.5% over the last year as companies sold goods out of their inventories to meet rising demand. The Bank of Canada said on Tuesday that it will begin raising interest rates to keep inflation in check as the economic rebound has been faster than expected.

Wholesale inventories rose 0.1% in February, the first increase since November 2008. The ratio of wholesale inventories-to-sales rose to 1.17 from 1.15, the first increase since August.
The agency began using a new sample of wholesalers in yesterday’s report and made other revisions to its data. Using the revised data the agency said January’s wholesale sales rose 2.4%. Last month it had said wholesale sales rose 3%, the fastest in three years.

The Canadian dollar closed the day still above parity with the US dollar after hitting a low of CAD 1.00119 during trading, it closed the day down 0.10% on yesterdays close at CAD 0.99895.

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By Forex Yard – The euro continued to decline during the European trading session despite new meetings between Greek government leaders, the EU, and the IMF. The pound was also trading lower following poor monthly retail sales numbers.

The EUR/USD fell to 1.3300 from an opening day price of 1.3387. This comes after the spread on Greek government bonds rose to a record high against German bunds. German bunds are considered to be Europe’s best measurement of risk. Traders have also been eyeing Portugal government debt as the bond’s spreads have also jumped to uncharacteristic high levels against the bund.

The pound was unable to hold its earlier gains following weaker than expected British monthly retail sales data. Retail sales for the month of March fell by 0.4% on market expectations of a 0.7% rise. As such the GBP/USD fell to 1.5374 from 1.5425.

This afternoon is flooded with U.S. data releases. At 12:30 GMT U.S. PPI and weekly unemployment claims are set to be released, along with existing home sales data at 14:00GMT. Positive data for the U.S. economy may help to extend the dollar’s gains into the New York trading session. The EUR/USD has found support at the 1.3330 price level. The next major support level for the pair rests at 1.3280, the bottom of this month’s earlier consolidation pattern.

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