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Euro stays in tight range in Asia today as markets continues to digest recent loss. But the recovery against dollar and yen is very weak and the corrective price actions suggests that the common currency is still vulnerable to deeper selloff. Greece situation and development will continue to weigh on sentiments. Greece head of Council of State Pikrammenos sworn in as leader of the caretaker government yesterday. New parliament will be sworn in today and is expected to announce new election date, probably June 17. The election is built up as a vote for staying in or exit Euro. New Democracy party leader Samaras said Greeks are “faced with two choices”, change everything in Greece with Europe, or “live through the horror and isolation of a euro exit”. However, … Read entire article »

The April FOMC minutes indicated that policymakers acknowledged improvements in economic growth but these remained insufficient to change its current accommodative policy stance. While there was slight change in language from the previous meeting, it appeared that the central bank turned mildly more dovish. Overall, the Fed continued to pledge that it would do more if the economy deteriorates further. Concerning the economic outlook, the central bank general viewed that growth will remain moderate and will eventually accelerate. At stated in the minutes, ‘economic growth would remain moderate over coming quarters and then pick up gradually’. Moreover, recent economic data has led ‘some participants to become more confident about the durability of the recovery’. Inflation will be ‘roughly balanced’. Policymakers remained cautious towards the job market. Some members ‘recalled that gains … Read entire article »

Greece triggered selloff in risk markets seems to have exhausted today as markets recovered in early US session on US housing data. The near term situation is somewhat cleared that Council of State president Panagiotis Pikramenos will lead the caretaker government till election, which is now set to be on June 17 after political leaders met with Greek President Papoulias today. There are still much uncertainties on what’s next for Greece but sentiments could stabilize for a session or two first. Meanwhile, Sterling was hit hard earlier today as BoE revised lower inflation and growth forecast in the quarterly inflation report. As noted before, the anti-austerity Syriza might be a front-runner to win the next election as latest poll showed. But we’ll be reminded that over 70% of Greeks … Read entire article »

The BOE released a dovish quarterly inflation report in May, lowering both inflation and GDP growth forecasts from February projections. Policymakers also cited the worsening situation in the Eurozone would affect the UK’s path to recovery and there was a “risk of a storm heading our way from the continent”. The central bank revised down its growth forecast for this year to +0.8% from +1.2%. The growth forecast in 2 years fell from +3% to 2.6% in the latest report. As stated in the report, prospects for the country’s growth are “unusually uncertain”. While “stimulus from monetary policy should help to support activity”, “continued strains within the euro area, tight credit conditions and the fiscal consolidation are all likely to temper the pace of expansion”. Policymakers concerned that the Eurozone crisis … Read entire article »

By: DailyForex.com In Asian trading, the Euro wallowed near to a 4-month low versus the U.S. Dollar, but traders expect a continued downtrend following the stalemate in Greek politics which will usher in a new election, certainly, but moreover, the increasing risk of a Greek exit from the Eurozone. Bond markets in the Eurozone are already on nerve’s edge, and the latest news is sure to weigh heavily on upcoming sovereign debt auctions, even as yesterday’s Spanish and Italian yields edged perilously higher. As reported at 12:08 p.m. (JST) in Tokyo, the EUR/USD was trading at $1.27223, a loss of 0.1% and only a few pips from the 4-month trough of $1.27215 struck yesterday on the EBS trading platform. Thus far in May, the Euro has lost nearly 4% of its … Read entire article »

The Eurozone economy turned out to be better than expected in 1Q12. Notwithstanding consensus forecast that the region would technically fell to recession with two consecutive quarters of contractions, the flash GDP data came in flat, compare with 4Q12′s -0.3% drop. Despite the apparently stronger than expected growth figure, the upside surprise mainly concentrated in a few countries and more peripheral economies, e.g.: Italy, have confirmed sharp recession. Investors should remain cautious about the Eurozone economic outlook. While the preliminary data still has chance to be revised lower, deep contraction might actually be reflected in the second quarter due to member countries’ fiscal consolidation. The 17-nation bloc reported a flat reading (q/q) in GDP growth in 2Q12, better than market expectation of a -0.2% and 4Q11′s -0.3% contractions, with the … Read entire article »

Risk aversion dominates global markets today as worsening Greece situation weigh on sentiments. After failing to form a coalition government following nine days of negotiations, political leaders will meet with Greek president Papoulias today again to organize another election in June, possibly on June 10 or 17, and put together a caretaker government. But would a new election solve the problems? The inability to for a coalition showed the division between pro-bailout and anti-austerity camp were so even that there cannot be any conclusion made despite the negotiation effort. The anti-austerity Syriza might be a front-runner to win the next election as latest poll showed. But we’ll be reminded that over 70% of Greeks indicated their intention to stay in Eurozone. So, Syriza’s win chance is far from being certain. … Read entire article »

Euro’s recovery was rather short-lived and the common currency is under tremendous selling pressing in early US session on news that Greece will hold a new election after multiple efforts to form a government. President Papoulias’s spokesman said that declared new vote after failing to persuade political leaders to form a technocrat government. No firm date for new election was given yet but it’s believed that new election will be in mid-June. A caretaker government will be formed tomorrow. EUR/USD broke 1.28 level after the news. Major European stock indices turned red while US equities opened mildly lower. France president Hollande sworn in in a low-key ceremony today. And, he immediately proposed to have a “new pact that will combine the necessary reduction of public debts and the indispensable … Read entire article »

By: DailyForex.com Traders are growing increasingly worried that the political impasse staged by the ruling parties in Greece will ultimately lead to the country’s pull out from the Eurozone which is pushing the common currency lower in Asian trading. Analysts see that the last ditch effort by the Greek president to draw all the parties together is not likely to have a good outcome, and another election is in the cards. Most political observers believe that that will ultimately just give the anti-bailout contingent more political clout. Political uncertainty notwithstanding, what worries one economist about the possibility of a Greek exit is that other E.U. member countries which are also in recession could also consider a Euro withdrawal. As reported at 12:51 p.m. (JST) in Tokyo, the Euro was trading at a … Read entire article »

Euro recovers mildly against dollar and yen today as risk market recover from recent selloff. Some support is obtained by German GDP data which showed 0.5% qoq growth in Q1 against expectation of 0.1% qoq. French GDP grew 0.0% qoq, meeting consensus. Some consolidations would possibly be seen in the common currency. But overtone is still soft as weighed down by uncertainties in Greece. In addition, things in other peripherals aren’t much better. Spanish yield surged through 6.3% yesterday and would continue to be watched. Italian banks were downgraded by Moody’s with negative outlook. The common currency is still vulnerable to deeper, and broad based selloff. In Greece, the left-wing Syriza looks very determined to block formation of any government and push for another election in June. They didn’t join … Read entire article »