Market Analysis by Finexo.com
EUR
The euro’s rally showed signs of faltering yesterday, as Moody’s decision to cut Greece’s debt rating to junk reminded forex traders that Europe’s debt crisis is from over. Release of the news just before Monday’s closing bell saw the pair slip back down and head towards $1.22. While expected, the news of the downgrade curbed an earlier burst of short covering that took the currency to almost $1.23 – its highest level in more than a week. Moreover, the single currency dropped to a new 19-month low against the British Pound and retreated from a near one week high versus the Japanese Yen.
Major upcoming events include the German ZEW report, which is expected to show that Europe’s leading economy is on a solid path to recovery. Last month’s number reflected the economic turmoil in Europe, and as result the figure fell to 45.8. German exporters have been benefitting from the weaker euro, and a stronger ZEW number could indicate that the recent debt crisis might be moderated by economic recovery. Economists predict a small recovery in the key economic figure to 48.7 points, a reflection of the relative stability seen over the course of the past few weeks.
GBP
Official comments to reduce public borrowing have boosted the British currency. However, news of Moody’s downgrade of Greece’s debt has renewed risk aversion – resulting in a stronger Dollar and a weaker Pound. As a result, after trading just above 1.4800 yesterday, the GBP/USD turned bearish and consolidated around 1.4740. Today’s Inflation Report Hearing will be significant in gauging the BOE monetary. A higher inflation figure could be bullish for the pound, as investors would this to lead to higher interest rates in the near future.
JPY
The Yen was little changed after the Bank of Japan announced its decision to hold the overnight call rate steady at 0.10%. The central bank announced that it will offers up to ¥3 trillion in loans to commercial banks in a new loan plan aimed at redirecting money to industries with high growth potential.
Forex Market Review & Analysis by Finexo.com
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