Market Review – 20/06/2011 21:38 GMT
The single currency rebounds in New York on euro-supportive comments from Eurozone officials
Euro rebounded strongly and broadly in New York session on euro-supportive comments from European Union Economic and Monetary Affairs Commissioner Olli Rehn and European Financial Stability Fund (EFSF) chief executive officer Klaus Regling.
Although the single currency fell initially at Asian opening and touched a session low of 1.4191 in European morning after European Union Finance Ministers announced that there would be no immediate decision on the release of aid to Greece until July and the next tranche of payment might just be around 6 billion euros, just half of what was promised, renewed buying interest contained intra-day losses and price then rallied in New York morning to a high of 1.4328 on comments by Eurozone officials Rehn and Regling. European Union Economic and Monetary Affairs Commissioner Olli Rehn said ‘increasing convergence of views towards a Vienna-style programme for Greece, avoiding default’ and European Financial Stability Fund (EFSF) Chief Executive Officer Klaus Regling said ‘EFSF guarantees will be raised from 440 billion euros to 780 billion euros in the future’.
Euro also rallied on crosses, eur/jpy, eur/chf and eur/gbp rebounded strongly after early fall from 114.54, 1.2147, and 0.8843 to as low as 113.58, 1.2017 and 0.8791 respectively.
Sterling moved in tandem with euro on Monday and despite dropping to a session low of 1.6109 in European morning, the British pound managed to stage a rebound there and then penetrated Friday’s high of 1.6200 in New York morning to an intra-day high of 1.6235 before easing, price traded around 1.6200 near New York closing.
The Japanese yen fell against the U.S. dollar on Monday after Japanese exports slumped in May, however, upside was limited due to broad-based dollar weakness in New York session and usd/jpy gyrated inside a narrow range of 80.02 and 80.37 for the rest of the day.
In other news, U.K. Telegraph reported today U.K. banks have pulled billions of pounds of funding from the eurozone as fears grew about the impact of a ‘Lehman-style’ event connected to a Greek default.
On the data front, Japan’s merchandise trade exports slumped by 10.3% in May, compared to a year earlier. In April, Japan’s exports declined by 12.5%. Japan’s merchandise trade imports, on the other hand, rose 12.3% during May.
Data to be released on Tuesday include:
RBA’s board June minutes; U.K. PSNCR, PS net borrowing and CBI orders; Germany ZEW economic sentiment and ZEW Current Situation; Canada leading indicators and retail sales; U.S. existing home sales.