Market Review – 07/04/2010 21:57GMT
Euro declines on concerns over Greece debt and stalled recovery
The single currency fell against the dollar for a fourth day in the longest stretch of decreases since February on worries that Greece may default and weak eurozone GDP.
Although the single currency rose to 1.3409 in Australia, renewed selling emerged there and pushed euro lower to 1.3359. Despite brief bounce to 1.3402, euro retreated and fell to 1.3326 at NY opening after the Greek finance minister said Greek banks have asked to use the remaining funds (about 17 billion euro remained) from a state support 28 billion euro package first agreed in 2008, highlighting the problems faced by the Greek economy and deteriorating the market sentiment. On the other news, eurozone GDP in Q4 came in at 0.0% q/q and -2.2% y/y versus the expectation of +0.1% q/q and -2.1% y/y and this caused speculation that the European Central Bank would keep interest rates at a record low. Later, the single currency staged a minor rebound from 1.3326 on short-covering in NY.
The greenback rebounded strongly versus the Japanese yen fm 93.56 to 94.27 in Asian morning. However, renewed cross-buying in yen especially against euro due to weakness in European and U.S. stock markets pressured the pair to 93.15 in NY afternoon. Aud/jpy fell from 87.51 to 86.28 while eur/jpy tumbled from 126.16 to 124.48 while gbp/jpy dropped sharply from 143.83 to 141.81.
Although the British pound moved narrowly in Asian morning, cable tumbled fm 1.5288 in European morning after the release of much weaker-than-expected U.K. CIPS services PMI which came in at 56.5 in March versus the economists’ forecast of 58.0 and well below 58.4 in February. The pair nose-dived to 1.5138 due to active cross selling in sterling on talk of a weaker bid-to-cover ratio of 1.88 at Wednesday’s auction of gilts maturing in 2015, much lower than 2.23 last time. However, the pair managed to hold above support 1.5130 and rebounded strongly to 1.5280 on short-covering before easing in NY afternoon.
Economic data to be released on Thursday include: Japan Current account and Machine orders, Australia Employment change and Unemployment rate, Swiss Jobless rate, U.K. Industrial production, Manufacturing production and BoE rate decision, Germany Industrial production and ECB rate decision.