The U.S. Dollar traded mixed but started the day strong as crude oil dipped below $90.00 per barrel. The lower demand for oil, and the fact that the IEA is willing to release reserve supplies, caused the commodity to come down in price. Furthermore, gold depreciated to $1,492 an ounce. But the dollar’s strength was short-lived as risk appetite returned to the markets on optimism that the Greek Parliament will approve the 78 billion Euro proposed budget cuts and austerity measures. The Dollar fell further against the Euro on news that French lenders were considering volunteer investments to fund the bailout package. Economic reports out of the U.S. indicated that Personal Spending reached their lowest levels since June of 2010 and Personal Income rose, though not as much as expected. Meanwhile, the Canadian Dollar advanced against the greenback as U.S. equities rose and the drop in commodities was mitigated. The Loonie dropped on speculations that the Bank of Canada may not raise the costs of borrowing money.
The Euro rallied as the Euro-zone’s banks continued to discuss the possibility of rolling over the Greek debt. Yesterday was light in terms of economic releases except for data showing that Italian Wages remained unchanged. All eyes will be on today’s events out of the Euro-region as the Greek Parliament is set to start the debate over the proposed austerity measures. The Pound Sterling dipped versus the U.S. Dollar and the 17-nation currency on economic data which revealed a fall in U.K. Home Prices by as much as 0.1 percent.
The Japanese Yen weakened against all of its counterparts as risk appetite took over the trading markets. This was due to increased optimism fueled by the fact that European banks are discussing the possibility of rolling over the Greek debt. Japan’s currency weakened the most against the U.S. Dollar on a positive outlook for U.S. yields.
Out of the South Pacific, the New Zealand Dollar slumped versus the U.S. monetary unit as the country’s trade surplus shrunk. The Australian Dollar also fell as investors bet that the Reserve Bank will reduce interest rates.
EUR/USD- Optimism Took Over The Market
The Euro weakened at the beginning of the trading day and gained momentum as investors felt optimistic that the Greek Parliament will approve the proposed austerity measures. The 17-nation currency strengthened further on news that the Euro-region’s banks will find a way to roll-over the Greek debt. The Euro rose as the German government accepted proposals by French financial institutions regarding volunteer participation in the bailout package.
GBP/USD- Home Prices Rose
The Pound Sterling continued on its downward trend as metrics showed that the U.K.’s Home Prices dropped by 0.1 percent. However, as investor optimism took over the markets, the Pound benefitted thereby erasing some previous losses and strengthening against the U.S. currency. In addition, the Lloyds Business Barometer Index showed an increase in the U.K.’s business sector for the next 12 months. A visit by the Chinese Premier also helped the Pound as he pledged to fund British businesses. Today will be important for the Sterling as GDP revision data will be released.
USD/JPY- Risk Appetite Weighted On Yen
The Japanese Yen weakened against most of its counterparts as investors sought risk assets. Today’s economic calendar showcases metrics which may exert influence on the value of the Yen. The Japanese monetary unit dipped the most versus the U.S. Dollar despite the fact that ratings agencies issued strong dismay for the state of the U.S. economy.
AUD/USD- Rate Outlook Weights On Aussie
The Australian Dollar dipped against the U.S. monetary unit as investors speculated that the Reserve Bank of Australia will lower interest rates. Analysts believe that the increasing yield argument that supported the value of the Aussie Dollar is no longer valid since investors are opting for less risk in the market.
Today’s economic calendar shows that there are a host of releases due to be released. The U.K. will report on GDP and Current Account. The U.S. will release data on CB Consumer Confidence and Home Price Indices Composite. The Euro-zone will issue metrics on German Consumer Climate, Italian PPI and the German Import Price Index. Japan will announce its Industrial Production (MoM). ECB President Jean Claude Trichet will speak while the FOMC member Richard Fisher will also hold a speech. And the Greek Parliament will commence debating the proposed austerity measures.