USD higher, EU rescue plan fails to reduce contagion fear
Tuesday, May 11th, 2010USD higher, EU rescue plan fails to reduce contagion fear
FX Highlights
- USD is trading higher as equity markets decline in reaction to concern the EU/IMF bailout plan will not contain the Greek contagion risk and in reaction to report of accelerating inflation in China, Greece is expected to ask for aid today, EUR trades lower pressured by speculation that despite the Greek bailout plan EU budget deficits are likely to widen and the EU economy likely to slow, the Greek crisis will force the ECB to maintain accommodative monetary policy, GBP trades lower pressured by UK political uncertainty and in reaction to mixed UK economic data, UK retail sales fall, house prices rise and industrial production jumps, CHF steady supported by report that Swiss consumer confidence posts strong gains, commodity currencies trade lower pressured by weaker equity markets and concern that accelerating inflation in China will encourage China to tighten monetary policy, the Shanghai stock index closed 1.9% lower, JPY trades higher supported by safe haven demand sparked by weaker equities and skepticism about the Greek rescue plan
- Focus turns to today’s release US wholesale sales and inventories
- China’s inflation rate rose at the fastest pace in 18 months to 2.8%
- The IMF says that the Greek debt is sustainable but there are significant risks, Moody’s says it may still downgrade Portugal and Greece’s debt rating, ECB adds liquidity, EUR lower
- Japan’s Finance Minister Kan says Japan is considering a cap on spending to limit JGB bond issuance, Japan’s JGB bond issuance is expected at Â¥44.3trln, Japan’s PM says that comment on limiting bond issuance is not official government policy, JPY higher
- Swiss Q2 consumer sentiment index improved to 14 from -7 in Q1,CHF higher
- Brown stands down as Britain’s PM, he will resign by September, a Labor/Liberal Democratic coalition government may be forming in the UK, April BRC retail sales fall 2.3%, April RICS house price balance +17 compared to +9 in March, March manufacturing output rose by 2.3%,GBP lower
- US equity markets set to open lower, European equities 2% lower, Nikkei closed 120 points lower
Upcoming Events
- US-Tuesday, March wholesales sales and inventories will be released expected at 0.5% and 1.1% respectively ÂÂ
- CAN-Tuesday, no major Canadian data is due for release today
Written by Easy-Forex
